By Brazil Stock Guide – As Braskem works to reorganize roughly R$56 billion in debt, Brazil has granted the petrochemical producer another 12 months of tariff protection from imported resins across some of its key domestic markets.
The Executive Management Committee of Brazil’s Foreign Trade Chamber, known as Gecex, decided to extend the 20% import tariff on seven categories of polyethylene and polypropylene produced domestically by Braskem. Without the temporary measure, the applicable tariff would fall back to 12.6%.
The current tariffs were due to expire in October. The extension keeps the protection in place for another year, preserving a trade barrier at a particularly sensitive time for Braskem, which is seeking to restore its financial position and reduce leverage through an out-of-court restructuring.
The measure was not granted specifically to Braskem. The request for an extension was submitted by Abiquim, Brazil’s chemical industry association. Government technical documents, however, identify Braskem as a domestic producer of all seven resin categories covered by the decision.
The list includes several grades of low- and high-density polyethylene, ethylene copolymers and polypropylene, raw materials used across industries ranging from packaging and plastic films to pipes, automobiles, furniture, toys, fibers and personal-care products.
The decision reflects growing concern within Brazil’s chemical industry over rising import penetration. Government data show that the United States was Brazil’s largest source of imports in 2025 for all five polyethylene categories covered by the extension, accounting for more than 80% of imports in one of them.
Import pressure continued in 2026. In the first half of the year, imports of one category of low-density polyethylene rose nearly 65% from the same period a year earlier. Imports of certain polypropylene categories also increased at double-digit rates.
The domestic industry argues that the global petrochemical market is suffering from significant excess production capacity, particularly in Asia, the Middle East and the United States. With supply exceeding demand in several regions, producers are increasingly looking for alternative markets for surplus output, putting additional pressure on prices.
Against that backdrop, the government decided to keep the resins on Mercosur’s list of products affected by temporary trade imbalances, a mechanism that allows member countries to temporarily raise import tariffs in response to significant disruptions in international trade flows.
There is, however, another side to the protection. Industry groups representing resin consumers, including plastics converters, opposed the extension, arguing that higher tariffs reduce competition and increase input costs for manufacturers that rely on polyethylene and polypropylene.
The dispute puts the government between two parts of Brazil’s industrial sector: domestic chemical producers facing competition from cheaper imports, and downstream manufacturers that benefit from access to lower-cost foreign resins.
For Braskem, the outcome is favorable. The 20% tariff will neither solve the company’s financial problems nor directly reduce its debt, but it preserves a layer of protection around two pillars of its Brazilian business — polyethylene and polypropylene — during a critical restructuring period.
As creditors negotiate how the burden of Brazil’s largest petrochemical company’s restructuring will ultimately be shared, Braskem has at least gained some breathing room on one front: the government has chosen to limit additional competitive pressure from imported resins in its home market.
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