Brazil’s Braskem swings to profit in Q1 but global petchems issues remain

SAO PAULO (ICIS)–Braskem swung to a net profit in the first quarter, year on year, but sales and earnings fell slightly as the global petrochemicals downturn continues, management at the Brazilian polymers major said on Monday.

Speaking to reporters from Sao Paulo, the company’s CEO and CFO described the operating environment as persistently challenging on the back of excess capacity and emerging international trade conflicts.

The company’s net profit stood in Q1 at $113 million, up from a net loss of $273 million in the same quarter of 2024, while recurring earnings before interest, taxes, depreciation and amortization (EBITDA) stood 2% lower, however, at $224 million.

Braskem produces mostly polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC), some of the most widely used polymers and which remain under intense pressure due to global overcapacities.

Braskem (in $ million)	Q1 2025	Q1 2024	Change	Q4 2024	Q1 2025 vs Q4 2024
Sales	3,331	3,618	-8%	3,285	1%
Net profit/loss	113	-273	N/A	-967	N/A
Recurring EBITDA	224	230	-2%	102	121%

Brazilian operations achieved 74% utilization rates, up 4% from the previous quarter, while US and European facilities operated at 80% capacity, a 13% improvement, and Mexican operations reached 79% utilization (up 2%).

The improved performance was primarily driven by better spreads and increased sales volumes, particularly in Brazil, Europe and the US.

CHINA PP COMPETITION: ADDs?
Much of the earnings call with reporters on Monday focused on the global trade tensions and competition from Chinese producers, particularly in the Brazilian market.

“The question of tariffs generated much instability and many doubts in this first quarter,” said CEO Roberto Ramos, who noted how negotiations over the weekend between China and the US in Switzerland could potentially alter the tariffs war.

“This discussion between the two countries should move toward some kind of normality. Therefore, I think when all is said and done, after all this commotion, very little will remain,” he said.

He highlighted a few aspects which have affected petrochemicals in the trade war so far, such as China’s decision not to impose retaliatory tariffs on US natural gas-based ethane imports, which he said stand at approximately 18 million tonnes annually.

That was a positive, he said, because ethane from the US to China would continue uninterrupted, preventing a scenario where excess ethane in the US would have driven down prices and potentially created advantages for ethane-based producers. Braskem operates most of its plants in Brazil on crude-derived naphtha.

However, Chinese authorities did maintain tariffs on propane imports from the US, which affects Chinese PP producers and that did affect Braskem, said the CEO.

“China has a surplus in PP, so it is a net exporter, and the main destination of this excess PP production has been precisely Brazil, which has greatly affected us here in the Brazilian market,” said Ramos.

“They wanted to become self-sufficient regarding both resins [PP and PE], had a project to become self-sufficient in PP by 2030, but achieved this much earlier, by 2024. Therefore, as there isn’t enough consumption for the resin, they’re forced to sell, and they sell here at a price we can’t compete with.”

In response to this competitive pressure, Ramos confirmed Braskem is actively pursuing trade remedies in talks with the authorities, which could, among others, include instruments like antidumping duties (ADDs) against China but also against the US, also a big producer with excess product in some materials.

“Yes, we are studying trade protection measures in relation to China, as, moreover, we are also doing in relation to US PE producers, who also place resin here at a lower price than they sell in their respective countries,” he said.

Management said they continue to pursue the “switch to gas” strategy, which involves systematically reducing dependence on naphtha as feedstock, particularly in Brazilian operations, in favor of more competitive ethane-based production.

Despite recent decreases in oil prices and consequently naphtha prices, executives said the price differential between naphtha and ethane remains substantial at approximately $350-370/tonne, sometimes even higher.

RECOVERY STILL WAITING
Although some of Braskem’s margin spreads posted improvements during Q1, the CEO was not too optimistic about a strong recovery anytime soon.

“I do not imagine that spreads will recover further in the short term, because there is still an excess supply of ethylene but also of propylene, and therefore the plants are operating at lower capacity. Apart from the US producers who are processing at over 90% of their capacity utilization, we here have around 70%, and the Europeans have even less than that,” said the CEO.

“As long as this excess installed capacity still exists, as long as the pace of construction of new plants in the US and China continues, there is no reason to imagine that spreads will react, because the supply and demand situation continues to be an excess of supply in relation to demand.

“If you have an excess installed capacity of 30 million tonnes of ethylene, for example, therefore of PE, and if the market increases its consumption volume by 5 million tonnes per year, you will need at least six years to be able to clear this excess supply. Therefore, there is no structural reason to think about an increase in spreads.”