Braskem SA (BAK)

2.1 Quarterly Thermoplastic Resins Performance

Demand² for thermoplastic resins in the Brazilian market in 2Q08 rose by 11% year on year and by 8% quarter on quarter, surpassing 1.1 million tons. This increase in relation to 1Q08 was led by PP, which grew by 15%, driven by growing demand from the automotive, agribusiness and consumer electronics industries. Meanwhile, growth in relation to 2Q07 was led by PVC, which surged 27% to reach 251,000 tons in the quarter. The tubes and connections, panels and shapes sectors have posted rapid growth, reflecting the strong construction market aided primarily by the growing availability of credit in Brazil.

Braskem bolstered its leadership position in the domestic market, registering growth in resin sales in 2Q08 of 18% to 598,000 tons as compared to 1Q08 and 17% as compared to 2Q07. Market share increased to 53% despite high levels of imports to the Brazilian market, especially of PP, where imported share reached 16% of total demand. The Polyolefins Business Unit recorded growth in PE and PP sales of 21% quarter on quarter and 18% year on year, outpacing the average growth in the industry to achieve market share of 54% in PP and PE. Sales at Petroquímica Paulínia were 17,000 tons of PP. Paulínia results are being deferred, as the plant is in a production stabilization phase.

The Vinyls Unit registered PVC sales of 124,000 tons, up 7% quarter on quarter and 13% year on year. Import volume fell 2% against 1Q08, yet remained at high levels, especially concentrated in imports from the United States, where demand is weak due to the slowdown in the construction industry and others. Given this scenario and the strong demand, Braskem’s PVC market share grew from 47% in 1Q08 to 49% in 2Q08.

Braskem resin exports in 2Q08 totaled 109,000 tons, down 11% against the prior quarter and 52% year on year, reflecting the strategy of maximizing profitability by allocating a greater share of sales to the domestic market, while continuing to serve strategic and more profitable clients in the export market.

In 2Q08, there were scheduled maintenance stoppages in one line for each of the crackers –in Triunfo in April and in Camaçari in June. At the same time, the PE plants also went through maintenance stoppages. These stoppages led to a production volume reduction of 11% for thermoplastic resins, which went from 704,000 tons in 1Q08 to 624,000 tons in 2Q08.