Brazilian chemical industry records USD 47 billion deficit in 2023

Imports of chemical products reached $52 billion, while exports amounted to nearly $12.1 billion in the year-to-date until October, resulting in a negative trade balance of $39.9 billion, as reported by the Brazilian Chemical Industry Association (Abiquim) on the 27th.

For 2023, the association’s projections indicate that the chemical products deficit is expected to reach $47 billion. This is amid imports driven by predatory prices from Asian sources, resulting in the lowest level of national production volume in the last 30 years, with an average of 35% capacity utilization in the chemical industry in Brazil.

In terms of physical quantities, significant increases in import volumes were recorded until October for various chemical products, including plasticizers (79.1%), thermoplastic resins (16.7%), basic petrochemical products (12.6%), chemical intermediates for detergents (6.5%), and other industrial chemicals (12.8%). These were imported at predatory prices, on average 22.9% lower than the same period last year, disrupting the domestic market and threatening domestic production of strategically important products for various value chains in the country.

Exports, on the other hand, in much smaller absolute numbers, experienced an 11.3% decline in physical quantities until October, totaling 11.7 million tons. This is attributed to the growing displacement of Brazilian products in key trading partners, driven by the influx of Asian products with artificially sustained competitiveness due to inputs (natural gas and energy) and Russian raw materials acquired by these countries at preferential prices due to the war in Eastern Europe. Additionally, Argentina‘s economic and currency difficulties, the primary individual market for Brazilian chemical products, contributed to the decline.

See below a chart developed with DataLiner data, which displays exports and imports by the Brazilian chemical industry from Jan 2020 and Sep 2023.

Exports and Imports | Chemicals | Jan 2020 – Sep 2023 | WTMT

Source: DataLiner (click here to request a demo)

According to Fátima Giovanna, Director of Economics and Statistics at Abiquim, the results of the chemical trade balance are alarming and indisputable evidence that Brazil urgently needs high-impact policies. These policies should allow for short-term vulnerability reduction in strategically sensitive chains to international economic fluctuations while sustainably creating added value to Brazil’s natural wealth and comparative advantages. She emphasizes that the recent government decision to return chemical import tariffs to the standard level of the Common External Tariff was a crucial first step in restoring the real competitiveness conditions of the national industry, ultimately increasing the industry’s share in GDP.

Additionally, Abiquim advocates for other measures, such as implementing a List of Transitory Increases to the Common External Tariff of Mercosur. This list would include chemicals that have suffered the most from surges in predatory imports. Abiquim also supports the development of a policy for the use of natural gas as a raw material.

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