UpdateDow/Braskem PP deal comes amid high Brazil prices – group

08 February 2012 19:33  [Source: ICIS news]

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PORTO ALEGRE, Brazil (ICIS)--A Brazilian plastics trade group is worried that Braskem's acquisition of four Dow Chemical polypropylene (PP) plants could harm the nation's plastics industry, it said on Wednesday.

Under the deal, Braskem will acquire two PP plants in Germany and two in the US for $340m (€255m).

Although the deal closed last year, Brazilian plastics trade group Abiplast opposed it, and it unsuccessfully sought for a Brazilian antimonopoly agency to veto the acquisition.

Abiplast said Brazilian resin prices reflect neither local nor international market conditions. "In the long term, this situation will bring enormous negative effects to the plastics supply chain as well as to the resins industry."

Prices for resins in Brazil are 35% higher than international prices, Abiplast said. Moreover, Brazil discourages imports by charging tariffs.

The tariffs make the Brazilian plastics industry too dependent on domestic producers for supplies, it said.

Nonetheless, the antimonopoly agency, the Conselho Administrativo de Defesa Economica (Cade), unanimously approved the deal without restriction.

In defending the deal, Cade official Marcos Verissimo said the deal would have a negligible effect on Brazil's domestic market, given the relative size of Dow's exports to the country, according to the agency.

As such, Verissimo said there was no visible concerns about the Dow and Braskem deal restricting the nation's market, according to the agency.

In a statement, Braskem said it agreed with Cade's decision.

Additional reporting by Al Greenwood 

($1 = €0.75)

By: Leo Siqueira
+1 713 525 2600

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