Brazil’s Abiquim Reports 25.1% Year-on-Year Drop in Chemical Imports

Brazil’s chemical imports totaled $46.7 billion, marking a 25.1% reduction from January to September 2023 compared to the same period the previous year, according to data released by the Brazilian Chemical Industry Association (Abiquim). In contrast, exports amounted to $10.9 billion, reflecting a 6% decrease during the same comparative interval.

As a result, Brazil’s chemical industry trade balance registered a deficit of $35.8 billion from January to September, the third-largest in Abiquim’s record, ranking behind only 2022 ($64 billion) and 2021 ($46.2 billion). The association anticipates a deficit of up to $48 billion for 2023.

Despite the decrease between January and September, there is a significant influx of Brazil’s chemical imports amid a scenario described as “alarming” by Abiquim, characterized by predatory and unfair acquisitions. The organization notes that markets in Asian countries have taken advantage of the conflict in Eastern Europe to sell products at artificially lower prices in the Brazilian market.

In the year-to-date until September, increases were observed among imports of plasticizers (76.6%), thermoplastic resins (18%), basic petrochemical products (12.3%), chemical intermediates for detergents (6.7%), and other chemical products (14.4%), according to Abiquim. The organization underlined that the imported prices of these products are approximately 30% below the normal average.

Abiquim warns that these imports are taking place alongside predatory pricing patterns, which are causing an imbalance in the domestic market. The average level of idleness in the Brazilian chemical industry stands at nearly 35%. At the same time, the pace of production and sales by domestic companies is at the lowest point in the last 17 years.

The chart below shows Brazilian imports of chemical products (hs 28;29), measured in TEUs, between Jan 2019 and Aug 2023. The data is from DataLiner.

Brazilian imports of chemicals | Jan 2019 – Aug 2023 | TEU

Source: DataLiner (click here to request a demo)

Fátima Giovanna Coviello Ferreira, Director of Economics and Statistics at Abiquim, explains that the high volume of chemical imports from Asian countries is due to these markets utilizing inputs such as natural gas, energy, and Russian raw materials at unnaturally low prices due to the war. According to the Director, China is currently the leading destination for Russia’s oil and gas exports.

Given the situation, Abiquim’s Director calls for the immediate end of the 10% reduction in the import tax rate on chemical products, which Brazil unilaterally applied. Fátima also advocates for implementing a list of temporary increases to the Common External Tariff of Mercosur, which includes chemical products that have suffered the most from a predatory surge with over a 60% increase in their import volumes.

“Overcoming this critical moment requires a series of pragmatic actions with high short-term impact in terms of access to raw materials and energy inputs on terms comparable to the world’s leading players.” These actions must be combined with priority foreign trade policies, argues Fátima.

Source: Isto É Dinheiro

To read the original publication, see https://istoedinheiro.com.br/importacoes-de-produtos-quimicos-no-acumulado-ate-setembro-caem-251-ante-um-ano-diz-abiquim-2/

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