InterviewBrazil's producers poised for growth

27 February 2008 18:27  [Source: ICIS news]

By Anna Jagger

LONDON (ICIS news)--Consolidation within Brazil's petrochemical sector has prepared the main producers to capitalise on the country's economic boom, Braskem's CEO Jose Carlos Grubisich said on Wednesday.

“It’s good timing,” Grubisich told ICIS news in a telephone interview. “Braskem and CPS will take full benefit of this growing market.”

Braskem and Companhia Petroquimica do Sudeste (CPS) are the two main producers to emerge from the restructuring of Brazil's petrochemical sector, which includes the return of state-owned energy group Petrobras to the upstream petrochemical production segment.

The restructuring process took a major step in 2007 with Braskem’s acquisition of Ipiranga and the creation of CPS by Petrobras and petrochemical holding company Unipar. The consolidation of the sector coincides with a strengthening in Brazilian chemicals demand based on strong economic growth.

The reorganisation consolidates asset portfolios along regional lines. CPS will group the ­petrochemical assets in the southeast states of Sao Paulo and Rio de Janeiro. Braskem, which was created in 2002, has assets in the northeast and south and is the largest petrochemical producer in Latin America.

Brazilian GDP is expected to grow by 4.5% this year, compared with over 5% growth last year, fuelled by rising consumption, Grubisich said. “Macroeconomic conditions are very stable in Brazil - inflation is under control and we have more income available because salaries have been increasing over interest rates.”

At the same time, interest rates are expected to be lower in 2008 than 2007, leading to more credit available in the market with longer terms, he added.

Brazil’s economy has so far risen above the downturn in the US economy, Grubisich continued. “For the first time, Brazil is not part of the problem but rather part of the solution.”

The healthy economic climate is expected to result in double-digit growth in domestic demand for Braskem’s key products - polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC) - in 2008, Grubisich said. Demand for these products rose 10% in 2007, following 9% growth in 2006, he added.

The restructuring of the Brazilian petrochemicals sector is aimed at creating a smaller number of large-scale players. Braskem announced today the conclusion of the acquisition of the Ipiranga Group petrochemical assets. Under the deal, Braskem holds a 60% stake in the assets and Petrobras holds 40%.

Conclusion of this transaction allows Braskem to proceed, as announced in November last year, with a swap deal in which it will acquire Petrobras’ minority interests in Copesul, Ipiranga Petroquimica, Ipiranga Quimica and Petroquimica Paulinia. In return, Petrobras will raise its stake in Braskem.

Crucially, the swap will give Braskem a 100% stake in basic chemicals producer Copesul and PE and PP producer Ipiranga Petroquimica (IPQ), both located in Triunfo, in the southern state of Rio Grande do Sul.

For the full interview with Jose Carlos Grubisich, see the 31 March issue of ICIS Chemical Business.

By: Anna Jagger
+44 20 8652 3214

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index