Brazil petrochem industry to witness a dull quarter

10-Jun-05

As exports continue to diminish for over a month on account of falling international prices and the domestic market continues to remain slack, the Brazilian petrochem industry seems to be on the verge of a dull quarter. Although prices have recorded a drop of 5% this quarter, the growth of China's economy and an expected hike in the price of oil on world markets could reverse the trend. Petrochem majors like Braskem have already cut working capacity from 98% in April to 90% in May, and could further reduce this to 85% in a couple of weeks. Profits for the Q1-2005 were lower that of H2-2004. Domestic sales this year are projected to be the same as in 2004. Innova, an Argentine subsidiary of Brazilian state run oil company Petróleo Brasileiro (Petrobras) estimates a 6-7% growth this year over last year. However, from January to May the company has witnessed exactly the same quantum of sales as in the same period in 2004.