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Braskem Mulling U.S. Cracker

Braskem’s new CEO Carlos Fadigas held a press roundtable at the New York Stock Exchange. Here are the main themes:

1) Braskem is considering building an ethylene cracker and polyethylene plant in the U.S. Mr. Carlos said he wants to tap into U.S. shale resources. He also reiterated Braskem’s designs to make an acquisition in the U.S. (I haven’t heard them say that for a while.)

I’ll likely write a feature story on Braskem in an upcoming issue, so I don’t want to taint my objectivity. That said, I really can go either way on this. On the one hand, with its Sunoco and Quattor integrations and projects in Mexico and Peru, as well as other expansions and plans at home in Brazil, Braskem as a lot on its plate. (Also it would have two new crackers in the NAFTA region, counting Mexico.) A U.S. cracker is a tall order.

On the other hand, Braskem is not to be underestimated. And Braskem executives have always struck me as capable. Moreover, Fadigas used to be CEO of Braskem Americas, where he oversaw the Sunoco acquisition. Finally, Braskem has polypropylene plants in West Virginia and Pennsylvania. So it is nicely positioned in the Marcellus region.

2) I pressed Mr. Carlos on whether he would build a plant in the U.S. without having an existing polyethylene business in the U.S. He acknowledged that it would be nice, though not necessary, to have such a presence. After the conference, we discussed how it is hard finding a polyethylene acquisition in North America nowadays because of all the interest in U.S. gas. He said he was willing to spend a little more than he would have a few years ago.

I think we have a good candidate for Dow’s HDPE/PP business. Though, I doubt we’ll see Dow sell that until it wraps up its arbitration with PIC of Kuwait. The Dow business might be a little steep for Braskem, but I think it would find a way to make that happen. Don’t forget that we would likely be talking about a JV here, so Braskem would only have to buy half the business.

3) Braskem is interested in participating in Comperj, the proposed Petrobras refinery and petrochemical complex in the state of Rio de Janeiro. No surprise there. However, Mr. Carlos indicated it would invest in a gas-based ethylene cracker and polyethylene complex. This is a big detour from how the complex was originally conceived. It was supposed to be a high-severity fluidized catalytic cracker that would convert heavy oil directly into ethylene and propylene and onto derivatives. We are seeing the mitosis of the project into fairly separate chemicals and refining entities.

This makes the project seem better to me. The original version was a pretty big hunk of sausage.

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