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Demand for resins in Brazil up 3% on year in Q1 2020 - Braskem   1  

June 25/2020

MOSCOW (MRC) -- Demand for resins in Brazil in the first quarter of 2020 increased 3% year on year to 1.40 million mt and 7% quarter on quarter, reported S&P Global with reference to Brazilian petrochemical producer Braskem's statement earlier this month.

Braskem said its crackers operated at a capacity utilization rate of 81%, up 3 percentage points quarter on quarter. Compared with Q1 2019, capacity utilization increased by 3 percentage points, Braskem said June 3.

The company's resin (polyethylene (PE), polypropylene (PP) and PVC) sales in the Brazilian market totaled 882,000 mt, up 0.5% year on year and similar quarter on quarter.

"Market share has been stable or very similar to the past quarters," Chief Financial Officer Pedro van Langendonck Teixeira de Freitas said June 3. "Braskem sells at an import parity in Brazil, which is part of our strategy. We adjust the prices to accommodate or to reflect prices with international prices and exchange rate," Freitas said.

In Q1, Braskem exported 289,000 mt of resins, down 23.2% year on year and down 6.2% quarter on quarter, "due to the lower product availability of the petrochemical plants and the prioritization of sales to the Brazilian market," it said.

Of the total sales, 76% were sold in Brazil, 11% in the Mercosur region, 4% in Europe, 2% in Asia and Oceania excluding China, 3% in China, 1% in North America and 2% in others.

Braskem said its PVC plants operated at a capacity utilization of 65%, 14 percentage points lower than in Q4 2019, due to a planned outage at a PVC plant in Bahia state. In the Q1, Braskem imported 117,000 mt of EDC and 44,000 mt of caustic soda. The company PVC sales in the Brazilian market totaled 136,000 mt, 9% more than in Q4 2019. No year-on-year comparison was provided.

The company said its PE sales were mostly destined to the food sector (29.2%), industrial (19.8%), retail business (10%). PP sales were focused on consumer goods (23.5%), food sector (22.5%), agricultural (17%) and automotive (9.5%). PVC sales was mostly destined to construction (60%), infrastructure (10.9%) and consumer goods (10.2%).

Braskem's PP sales in the US totaled 368,000 mt, up 6.4% year on year and 3.4% quarter on quarter.

Its capacity utilization rate was 95%, 9 percentage points higher quarter on quarter and 4 percentage points higher year on year.

Braskem said demand for resins in the US was 1.3% higher quarter on quarter to 2.14 million mt, due to stocking from clients and higher medical and packaging demand, and 9.9% lower year on year, due to weak performance of the global economic related to the coronavirus pandemic.

"In the US, the expectation is for an improvement in June," said Freitas.

The company's PE sales in Mexico was 2% higher year on year at 213,000 mt, and also up 3% compared with the previous quarter.

Its capacity utilization rate was 86%, up 4 percentage points quarter on quarter and 7 percentage points year on year.

Braskem said demand for resins in Mexico increased 2% quarter on quarter to 543,000 mt and fell 0.4% year on year, due to higher stocking from clients.

"In Mexico, we had a very good month of April in sales, and in May it was a good month overall, so we do see an improvement," Freitas said.

Of the total sales, 51% were sold in Mexico, 18% in the Latin America region, 14% in the US, 3% in Europe and 3% in Asia. Freitas said fewer sales in the Mexican market has been offset by larger exports.

The company's PP sales in Europe were steady year on year to 131,000 mt, and increased 8.3% quarter on quarter.

Its capacity utilization rate was 88%, up 1 percentage point quarter on quarter and down 2 percentage points year on year.

The company said demand in Europe was down 5.8% year on year to 2.56 million mt, but increased 9.1% compared with the previous quarter.

As MRC wrote before, Brazilian petrochemical firm Braskem SA reported in early June a net loss of USD777 million in the first quarter compared with a profit of USD243 million a year ago, as foreign exchange oscillations led to higher financial expenses. The company said financial expenses grew to USD1.332 billion in the quarter ended March 31 from USD243 million a year ago, given the depreciation of the Brazilian real and the Mexican peso against the US dollar.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim.  At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
Author:Margaret Volkova
Tags:Asia, PVC, PP, PE, LLDPE, PP random copolymer, LDPE, Braskem, Brazil, Mexico, Rossiya, USA.
Category:General News
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