By Brazil Stock Guide – Braskem (BRKM5; BAK) said the conflict in the Middle East sharply increased global petrochemical prices in the first quarter, boosting spreads across its operations even as the company reduced production in Mexico to preserve liquidity.
According to the company, Brent crude averaged $81 per barrel in the quarter, up 27% from the previous quarter, while naphtha prices rose 23% and natural gas prices increased 28%.
Braskem directly linked the move to the conflict in the Middle East and the closure of the Strait of Hormuz, which reduced global oil and petrochemical supply.
The company said U.S. polyethylene prices rose 22% sequentially, Asian polypropylene prices increased 17% and U.S. EDC prices climbed 37% during the quarter.
As a result:
- Brazil polyethylene spreads increased 23%;
- European polypropylene spreads jumped 71%;
- North American polyethylene spreads tied to Mexico rose 32%.
Braskem said higher international prices reflected tighter product availability, logistics disruptions and stronger demand redirected toward U.S. producers after the Strait of Hormuz closure.
In Brazil, the company said stronger domestic demand and geopolitical uncertainty helped resin sales rise 5% sequentially, particularly polyethylene sales.
But despite the stronger pricing environment, Braskem reduced utilization rates at its Mexican polyethylene plants to 55%, down from 85% in the previous quarter.
The company said lower ethane imports were “in line with Braskem Idesa’s liquidity-preservation measures.”
Braskem also stated twice in the report that the Middle East conflict did not materially affect first-quarter financial results. Even so, the report showed that the war-driven supply shock helped lift petrochemical prices globally, improving spreads in several of the company’s core markets.
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