Braskem’s Boost: Brazil’s Chemical Industry Fortified by Import Tariff Hike

The Brazilian government has taken a decisive step to protect its chemical industry by approving a significant increase in import tariffs.

This move, through the Chamber of Foreign Trade (Camex), will impact various chemical products, including those sold by Braskem, a major petrochemical company.

The new tariff rate will jump from 12.6% to 20% for a range of chemical imports. This change will affect seven key products in Braskem’s portfolio, such as Polyethylene and PVC Resin.

The measure aims to level the playing field for domestic producers. Industry representatives have long advocated for this change. They argued that Asian imports, particularly from China, were creating unfair competition.

The Brazilian Chemical Industry Association (Abiquim) has been vocal about this issue for some time now.

Analysts view this development as a positive one for the sector, especially for Braskem. The company has been losing market share to imported resins from the US, Asia, and the Middle East. This tariff hike could help Braskem regain its footing.

Santander Bank predicts two main benefits for Braskem from this policy change. First, the company may recover some of its lost market share.

Second, domestic resin prices are likely to increase. These factors could significantly boost Braskem’s financial performance.

Estimates suggest that Braskem’s EBITDA could rise by as much as $350 million annually. This represents a potential 20% increase in the company’s 2025 EBITDA projections.

Such a substantial improvement has led Santander to maintain its “buy” recommendation for Braskem shares.

XP Investimentos, another financial institution, shares this optimistic outlook. Their analysts believe the tariff increase could help Braskem reverse its recent cash burn trend.

This could position the company favorably for the gradual upturn in the petrochemical cycle.

Braskem’s Boost: Brazil’s Chemical Industry Fortified by Import Tariff Hike

UBS has also upgraded its recommendation for Braskem shares to “buy.”

The bank sees potential for a 50% increase in share price following this development. This optimism reflects the broader market sentiment towards Braskem’s future prospects.

Despite this positive news, Braskem’s shares experienced a slight dip on the day of the announcement. However, many analysts view this as a temporary setback in an otherwise promising outlook for the company.

The tariff increase is set to last for one year. During this time, the Brazilian chemical and petrochemical industries are expected to benefit significantly.

This move underscores the government’s commitment to supporting domestic industries in an increasingly competitive global market.

Braskem’s Boost: Brazil’s Chemical Industry Fortified by Import Tariff Hike

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