BAK - Mexico cuts off gas supply to Braskem plant in escalating dispute

Braskem (BAK) closed -4.7% in today's trade as Mexico's state-owned pipeline administrator cut supply to the company's Mexican plant, forcing a complete shutdown in operations."The contract has ended," Mexican Pres. Lopez Obrador says as his government stopped natural gas supply to Braskem Idesa's Ethylene XXI plant.The government has for months been seeking to cancel an ethane supply deal between state oil firm Pemex and Braskem-Idesa, a consortium held 70% by Brazil's Braskem and 30% by Mexico's Grupo Idesa.Under the terms of a 20-year contract, Pemex committed to selling ethane to Braskem-Idesa for $0.16/gallon; when the contract was signed in 2010, market prices for ethane were ~$0.50/gallon.Braskem is undervalued based on Brazil's economic recovery prospects, Stephen Simpson said in a bullish report published on Seeking Alpha.

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Mexico cuts off gas supply to Braskem plant in escalating dispute