Brazil’s Braskem pushes polymers recovery to 2026 despite some green shoots

SAO PAULO (ICIS)–Braskem’s said on Tuesday a recovery in polymers prices in earnest will now only take place from 2026, with the Brazilian petrochemicals major posting again a poor set financial result.

Global prices for some of Braskem’s key products – such polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC) – remain depressed and, despite some positive pricing signs at the start of 2024, this year will be again a difficult one.

However, according to chemicals equity analysts on Tuesday, Braskem’s results could indicate certain improvements in its operating conditions.

The company’s stock jumped as much as 6% in Tuesday morning trading, although the gains had moderated by the afternoon to just over 3%.

Earlier on Tuesday, Braskem’s said its losses had widened in 2023, year on year, while its earnings before interest, taxes, depreciation and amortization (EBITDA) fell nearly 65%.

However, investors on Tuesday preferred to focus on Tuesday in Q4’s EBITDA, which went into positive territory, compared to Q4 2024, as well as a more moderate fall in revenue.

Braskem (in $ million)	Q4 2023	Q4 2022	Change	2023	2022	Change
Revenue	3,369	3,613	-7%	14,113	18,733	-25%
Recurring EBITDA	211	-32	N.A.	743	2,060	-64%
Net income	-317	-326	-3%	-935	-70	1,234%

“Q4 continued to be a difficult period for the petrochemical sector, so we consider a positive Braskem’s slight improvement in some price levels and spreads. Meanwhile, we see the company exploring some of the competitive advantages of its assets,” said equity analysts at Brazilian broker XP Investimentos.

“However, we think it is too early to interpret this as a structural turnaround for the sector in 2024.”

A VERY LONG DOWNCYCLE
Braskem’s quarterly results conference calls have become an affair in which the most valued answer is when the company expects the recovery in earnest to take place.

During most of 2023, the company’s executives would say that the global markets would start recovering this year and give way to the upcycle in 2025 onwards.

However, on Tuesday both the company’s CFO, Pedro Freitas, and his second on board, the head of investor relations, Rosana Avolio, made it clear that some green shoots appearing in coming quarters would not mount to what the producer would consider a recovery.

“2024 will be the year of a transition towards normalization, but still within the downcycle. We expect prices to start recovering in 2025 and for them to achieve sustained, higher levels in 2026,” said Avolio.

“However, prices at the start of 2024 are better than we were expecting,” she added.

Freitas placed the beginning of the upcycle in 2026-2027.

Other Latin American petrochemicals players are also expecting a recovery only in two- or three-years’ time.

In February, Mexico’s Orbia said China’s PVC overcapacities were to cast a shadow globally until at least 2026 while announcing it was stopping any expansion in that material until prices went up to, at least, $1,200/tonne.

Front page picture: Braskem’s facilities in the state of Sao Paulo, Brazil
Source: Braskem