By Malini Hariharan
Less then a week after the blog had highlighted Braskem’s plans for global growth through acquisitions the company has announced that it will buy the polypropylene (PP) assets of US-based Sunoco.
The $350m deal, still subject to regulatory approvals, gives Braskem 950,000 tonnes/year of US capacity and makes it the third largest PP producer globally, ahead of Asian heavyweights such as Reliance Industries Formosa and PetroChina. Reliance is of course looking to become the largest PP producer by acquiring LyondellBasell.
Returning to Braskem, its chief financial officer Carlos Fadigas said that the acqusition makes the company the eighth largest resins producer globally and the aim is to be among the top five producers by 2010.
He also highlighted that the Sunoco deal was aimed at opening doors for other acquisitions in the U.S. Analysts expect Braskem to be looking at more PP and also PE assets in the US.
And analysts see Braskem using US plants to tap Asian markets.
In an ICIS news report Walter de Vitto, oil and gas analyst for Tendencias Consultoriaa said: “Braskem’s strategy is to use Brazil as its base and produce resins in the US at lower costs compared with Brazil, which would make its products more competitive in the international market and could open other doors in Asia.”
“By entering the US market, Braskem would have cheaper natural gas as feedstock, which would make access to Asian markets more feasible,” de Vitto said.
Braskem did point out yesterday that the Sunoco buy makes it one of the most competitive PP producers in the US as two of Sunoco’s plants are located outside the US Gulf giving it access to refinery propylene at a discount.
The feedstock advantage stems from reduced logistics costs, said Fadigas, adding that 60% of US refineries are located outside the US Gulf area.
Sunoco has 70% of its feedstocks on contract and relies on the spot market for the remaining 30%, reports ICIS news.