BAK

Business Context and Reporting Period

Company: Braskem S.A.
Filing Type: Form 6-K (Material Fact)
Reporting Period: Third Quarter 2024 (ended September 30, 2024)
Release Date: October 23, 2024
Context: This filing presents preliminary Production & Sales data for 3Q24. The data has not been audited. The quarter was characterized by the resumption of operations at the Rio Grande do Sul complex following extreme weather events in the prior quarter, alongside global market influences from Red Sea conflicts affecting maritime freight and supply chains.

Key Financial and Operational Metrics

Note: This filing contains operational volumes and spread analysis but does not provide specific revenue, profit, cash flow, or debt figures.

• Utilization Rates:
  • Brazil/South America: Average cracker utilization increased +2 percentage points (p.p.) vs. 2Q24 and +5 p.p. vs. 3Q23, driven by the restart of the Triunfo Petrochemical Complex.
  • Green Ethylene: Utilization increased +60 p.p. vs. 2Q24 following the weather-related shutdown.
  • Europe: PP plant utilization decreased -2 p.p. vs. 2Q24 due to scheduled maintenance.
  • Mexico: PE plant utilization decreased -4 p.p. vs. 2Q24 due to lower ethane imports and scheduled maintenance.
• Sales Volumes (Brazil Market):
  • Resins: Increased +6% vs. 2Q24 (driven by PP and PVC demand); decreased -2% vs. 3Q23 (due to high downstream stocks).
  • Main Chemicals: Increased +14% vs. 2Q24; increased +31% vs. 3Q23.
  • Green PE: Increased +3% vs. 2Q24; increased +4% vs. 3Q23.
• Exports (Brazil/South America):
  • Resins: Increased +21% vs. 2Q24; +2% vs. 3Q23.
  • Chemicals: Decreased -34% vs. 2Q24 and -47% vs. 3Q23, as the company prioritized the domestic market.
• Petrochemical Spreads (Profitability Indicators):
  • Brazil PE Spread: Increased +12% vs. 2Q24; +61% vs. 3Q23.
  • Brazil PP Spread: Decreased -5% vs. 2Q24; +9% vs. 3Q23.
  • Brazil PVC Par Spread: Increased +13% vs. 2Q24; -4% vs. 3Q23.
  • Mexico North America PE Spread: Increased +7% vs. 2Q24; +47% vs. 3Q23.

Material Changes vs. Prior Periods

Operational Recovery: The most significant change is the reestablishment of the Rio Grande do Sul petrochemical complex, which was interrupted in May 2024 due to extreme weather. This drove higher utilization and sales volumes in Brazil compared to 2Q24.

Market Dynamics:

• Freight & Geopolitics: Conflicts in the Red Sea increased maritime freight rates, impacting trade flows and marginal product pricing globally. This contributed to higher spreads in Brazil and Mexico.
• Supply Constraints: Scheduled and unscheduled shutdowns in various regions (Europe, Mexico, and global refineries) restricted supply, supporting price levels for certain resins and chemicals.
• Feedstock Costs: In Mexico, ethane prices dropped -18% vs. 2Q24 due to lower US demand and oversupply, significantly widening the PE spread.

Outlook, Risks, and Contingencies

Management Commentary: Management notes that international spreads are on an increasing trajectory due to supply restrictions and freight costs. The company is actively managing inventory and commercial opportunities across segments.

Risks and Contingencies:

• Geological Event in Alagoas: The filing explicitly references potential impacts from a geological event in Alagoas and related legal procedures on the Company's business and financial condition.
• Forward-Looking Statements: The report contains estimates regarding future economic conditions, industry trends, and the impact of the Alagoas event. Actual results may differ significantly.
• Market Volatility: Continued volatility in maritime freight, feedstock availability (e.g., ethane imports in Mexico), and global demand remains a key risk factor.

Investor Verification Checklist

• Verify the final audited financial results for 3Q24 to confirm if operational improvements translated to revenue and profit growth.
• Monitor the status and financial impact of the geological event in Alagoas and associated legal proceedings.
• Track the sustainability of the Red Sea conflict impacts on freight rates and their effect on future spreads.
• Confirm the timeline for full capacity restoration at the Rio Grande do Sul complex and the stability of ethanol supply for Green Ethylene production.
• Assess the impact of scheduled maintenance shutdowns in Europe and Mexico on full-year production targets.