Brazilian sales to China drop in H1 2022

Brazilian sales in the year’s first half were marked by a slight 0.2% increase in volume compared to the same period in 2021. In turn, prices increased 20.2% in the same comparison frame.

In terms of imports, the volume acquired from abroad fell by 1.9 percent, while prices rose by 33.1%.

Consequently, the country maintained its trade balance surplus, keeping a difference of R$ 34.3 billion between spending and revenue. However, this figure is R$ 2.7 billion lower than recorded in the first half of 2021.

Feeling the external effects 

Brazil felt the effects of the slowdown of the Chinese economy with the worsening of the Covid-19 pandemic in the Asian country, including a 14% reduction in the volume exported to its primary buyer, as shown by the Foreign Trade Indicator (Icomex) of July.

Even though the Chinese are important buyers of ore, soybeans, and oil from Brazil, only the oilseed registered a positive variation in its sales, up 18.79% compared to the first half of 2021, totaling R$ 20.26 billion. These figures represent 66% of Brazilian shipments of the product.

See below the track record of Brazilian soybean shipments to China from January 2021 to May 2022. Data are from DataLiner.

Brazilian soybean exports to China | January 2021 – May 2022 | WTMT

Source: DataLiner (click here to request a demo)

The Asian power reduced its oil and iron ore purchases, with drops of 1.26% and 32.9%, respectively. The country, however, did not stop buying animal protein, with exports increasing by 86.6%, adding up to BRL 3.67 billion.

The Icomex indicators still find the second half uncertain due to the inconstant evolution of the pandemic in China, which chooses to maintain harsh isolation measures with each new contagion outbreak.

It is worth noting that China is Brazil’s leading trading partner. Last year, Brazil exported US$ 87.9 billion to the Asian country; the trade balance closed with a surplus of US$ 40.257 million.

See below the year-to-date volumes, recorded from January to May 2022, of the ten most significant exports from Brazil to China in containers. The data is from the DataLiner.

Top 10 Exports to China in Containers | Jan 2022 – May 2022 | TEU

Fonte: DataLiner (clique aqui para solicitar uma demonstração)

 Changing routes

In the case of oil, data from the Foreign Trade Secretariat (SECEX) of the Ministry of Economy show that Brazil diverted the lost demand from China to other countries.

The increase was significant in Brazilian sales to regions such as the United States (121%), Spain (205%), and the Netherlands (80%), in the case of crude oil, which may be related to a substitution of imports from Russia, in retaliation for the war in Ukraine.

Oil grows among Brazilian exports

According to Icomex, the value increase of exports in June is associated with the positive change in prices (15.7%), as the volume exported dropped by 0.6%.

The same occurs for imports, with an increase in prices of 37.2% and a fall in the volume of 2.7%.

The imported volume recorded by Icomex repeats the downward trajectory seen every month between 2021 and 2022, with May being the sole exception, given the increase in purchases of oil and fertilizers.

According to the cross-industry analysis conducted by FGV IBRE, the Brazilian agribusiness industry saw a 5.3% decrease in sales in the first semester but a 39.9% increase in prices.

In the extractive industry, the increase registered in price (5.5%) was smaller than the decrease in volume (-10.8%).

Only the Processing Industry had positive variations on both fronts – respectively, 21% and 8.1% – giving evidence for what had been found by previous FGV IBRE studies on the importance of the external sector in maintaining the confidence of the Brazilian industry high.

Export increases

While the amount shipped to China continues to fall, the volume exported to Argentina has increased, indicating that the crisis ravaging the Latin American country has not yet hampered trade flows, according to Icomex.

Argentina’s demand is notable in the sales of the automotive sector, which remained heated. Total exports from Brazil to the country grew by 12.4% in the first half of the year compared to the same period in 2021. However, this expansion was 20.4% only in products from this segment.

Among the main products exported are fuel oil, beef, soybean meal, poultry meat, cellulose pulp, and sugars, underscoring the concentration in activities related to the commodities sector.

In summary, the increase in the value of trade flows in the first half of the year is due to price increases since the volume was either unchanged (exports) or retreated (imports).

Source: Money Times 

To read the full original article, please go to: https://www.moneytimes.com.br/vendas-para-a-china-caem-no-primeiro-semestre/

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