InterviewSunoco PP deal opens Brazil Braskem to global growth

01 February 2010 22:33  [Source: ICIS news]

By: Hellen Berger

SAO PAULO (ICIS news)--Brazil's Braskem acquisition of the Sunoco's polypropylene (PP) business is part of a general plan for international growth, a market analyst said on Monday.  

Braskem agreed to pay $350m (€252m) for the assets, saying the deal also included a research centre Sunoco owns in Pennsylvania, but not the company’s phenol operations.

“The petrochemical sector needs to be viewed in terms of its global market in which certain characteristics are important for becoming competitive, such as abundant and inexpensive feedstock, access to markets and innovation,” said Walter de Vitto, oil and gas analyst for Tendencias Consultoria.

In a conference call, Carlos Fadigas, Braskem chief financial officer, said that the deal is also aimed at opening doors for other acquisitions in the U.S.

“Braskem’s strategy is to use Brazil as its base and produce resins in the US at lower costs compared with Brazil, which would make its products more competitive in the international market and could open other doors in Asia,” the analyst said in Portuguese.

The US market alone is a very large one and access to that market would be crucial for a company that intends to be among the world’s largest, de Vitto said.

Brazilian operations would be the leverage for other markets, according to de Vitto.

“The Brazilian market is relevant and guaranteed, so the extra output would be exported, while costs could be reduced with better usage of plant capacities and access to cheaper feedstock overseas,” de Vitto said.   

“By entering the US market, Braskem would have cheaper natural gas as feedstock, which would make access to Asian markets more feasible,” de Vitto said.            

According to other analysts, Braskem plans to acquire polyethylene (PE) and polypropylene plants in North America.

Although Fadigas has said Braskem would focus on the Americas, including Mexico, Venezuela, Peru and Bolivia, de Vitto said the company will focus mostly in Brazil and the US and aim for markets in China.   

($1 = €0.72)

For more on PP visit ICIS chemical intelligence
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By: Hellen Berger
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