Braskem faces deeper crisis than global petrochemical peers
Braskem: company is racing against time to reach an agreement with creditors and restructure R$56.5bn in debt
Edilson Dantas/O Globo
Although the prolonged downturn has pushed major names in the global chemical and petrochemical industry to the brink and dragged down operating profit at the world’s 100 largest companies in the sector in 2025, no other recent crisis among companies with global operations compares in depth with the one Braskem is currently facing.
Hit by a combination of years of unsuccessful efforts to sell its controlling stake, repeated management changes, billions of reais in costs related to land subsidence in neighborhoods of Maceió, operational challenges in Mexico, and, more recently, a plunge in petrochemical spreads, the Brazilian company is racing against time to reach an agreement with creditors, restructure R$56.5 billion in debt, preferably through an out-of-court restructuring, and keep its operations running.
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According to a study by RGF-BizDoc comparing 2025 financial data from seven major global petrochemical companies based in different regions and also affected by the tougher market environment, Braskem was by far the hardest hit. RGF-BizDoc produces independent analytical reports and monitors companies undergoing financial restructuring in Brazil.
At the end of last year, while Braskem had a staggering leverage ratio of 14.7 times, Europe-based Ineos, the second-most leveraged company in a group that also includes Dow, LyondellBasell, Westlake, Sabic, and Formosa, had net debt equivalent to 5.7 times its earnings before interest, taxes, depreciation and amortization (EBITDA) over the previous 12 months. In addition, Dow, LyondellBasell, Westlake, and Sabic maintained investment-grade credit ratings, while Braskem lost its investment-grade status at the major rating agencies beginning in late 2023.
“The explanation is not the cycle itself; it is what Braskem brought into the cycle,” RGF-BizDoc said in a report shared with Valor.
Among the weaknesses identified by the consulting firm, in addition to the Maceió disaster, are issues that have dragged on for years—including former parent Odebrecht, now Novonor, and Braskem’s own involvement in Operation Car Wash, which uncovered corruption schemes in Brazil, as well as the absence of a “stable controlling shareholder.” The company also carries structural weaknesses dating back to its formation in the early 2000s, including its reliance on naphtha, a feedstock that has become less competitive than natural gas, and an expansion strategy built on dollar-denominated debt.
The list of factors weighing on Braskem also includes billions of reais in dividends paid to its former controlling shareholder in 2021 and 2022, its high exposure to dollar-denominated debt, which accounts for about 90% of the total, and the impact of the real’s 60% depreciation over the past decade, which accelerated leverage when measured in local currency. “Braskem did not respond to the industry’s crisis with the speed and depth required,” said economist Claudio Damasceno, a partner at RGF and BizDoc.
According to Damasceno, the company’s inability to respond forcefully enough has deeper roots. “From the outset, Braskem chose a highly leveraged business model. It was a monopoly at the time, and high leverage was considered acceptable, leading the company to pursue an aggressive expansion strategy financed by debt. But exchange-rate and interest-rate conditions changed,” he noted.
The report concludes that major global petrochemical companies plunged into losses last year, but not to the extent seen at Braskem, precisely because of its history. “Braskem is the only major producer to have reached default and sought protection from creditors, with leverage roughly three times that of its most financially pressured peers,” the report pointed out.
Despite being deeper in crisis, Braskem was the only Brazilian company to make the latest ranking of the world’s 100 largest chemical and petrochemical companies by ICIS, released this week. In the consulting firm’s annual ranking, a global benchmark for market intelligence in the sector, Braskem ranked 25th by sales. Germany’s BASF reclaimed the top spot, with revenue of $70 billion last year.
According to the “ICIS Top 100 Chemical Companies” report, 2025 was the worst year of the current downturn in terms of industry earnings. The companies in the ranking saw operating profit fall 47.3%, while revenue declined 4.6% and net income plunged 81.9%.
The weakness is driven by a global oversupply of major petrochemical products, as new capacity has come online, particularly in China and the United States, since 2023. Since 2020, China has brought about 30 million tonnes of ethylene capacity into operation, the main petrochemical feedstock, more than enough to meet all additional global demand through the end of last year.
The tariff war fueled by U.S. President Donald Trump, which initially focused primarily on China, contributed to a reshuffling of global trade flows and redirected excess production toward less-protected markets such as Brazil, affecting what was still Braskem’s largest market.
RGF-BizDoc highlights that after petrochemical spreads rebounded in 2021 and 2022, driven by logistics bottlenecks and a rush to replenish inventories as markets reopened after the COVID pandemic, the industry entered its worst crisis in decades. The downturn was briefly interrupted in March this year by a supply shock stemming from the conflict involving Iran.
The consulting firm’s study shows that there were already signs at the time that Braskem could be putting itself in a vulnerable position. “The post-pandemic supercycle gave Braskem recurring EBITDA of R$10.6 billion in 2022; the turn in the cycle drove spreads and margins lower, and cash generation collapsed in the following years. Revenue fell from about R$96 billion in 2022 to roughly R$74 billion-R$79 billion, while the EBITDA margin fell from double digits to 4%-5% at the bottom of the cycle,” it said. Successive losses eroded the company’s equity, which turned negative in 2024.
Although reaching an agreement with creditors still appears to be a difficult proposition, Braskem has a viable path to an operational recovery, said João Luiz Zuñeda, founding partner of consulting firm MaxiQuim. “Braskem remains a significant player and can recover [operationally]. It is a company that competes globally; it is no longer a regional player.”
For the industry specialist, two factors will be critical to Braskem’s recovery: greater availability of natural gas for use as a feedstock in Brazil and Petrobras, which currently shares control of the company with asset manager IG4 Capital.
“The shift in global geopolitics, which has directly affected the oil and gas and petrochemical industries, requires a new approach to the sector. I see Petrobras’s greater involvement in Braskem’s management and strategy as positive. Petrobras needs to be part of the debate and help develop a long-term plan for Brazil’s petrochemical industry, and Braskem is at the center of it,” Zuñeda said.
Braskem declined to comment. Petrobras did not respond to a request for comment.
