Chemical Imports Surge in Brazil, Raising Concerns for Industrial Sector

In 2023, the share of industrial chemical products in Brazil’s domestic apparent consumption reached its highest level in 30 years, standing at 47%. This increase in imports follows a period of subdued demand, according to a survey by the Brazilian Chemical Industry Association (Abiquim).

Imports of intermediates for thermosetting resins surged by almost 86%. Notable growth was also seen in imports of plasticizers (57.3%), thermosetting resins (44.2%), and thermoplastic resins (17.1%).

“The sector struggles to compete with the aggressiveness of imports or seek alternatives in the external market,” stated Fátima Giovanna Coviello Ferreira, Director of Economics and Statistics at Abiquim.

Economist Paulo Gala from the Getulio Vargas Foundation (FGV) expressed concern, noting, “In a year when the Brazilian economy grew by 3%, the chemical industry experienced a contraction of 10%. This indicates a serious process of deindustrialization.”

According to Abiquim, domestic chemical production declined by 10.1%, while exports fell by 10.9% last year. Meanwhile, imports rose by 7.8%. Brazilian demand, measured by the sum of production and imports minus exports, decreased by 1.5%, and domestic sales shrank by 9.4%.

Capacity utilization hit a record low of 64%, the lowest level in the historical series. Abiquim states that 2007 was the last year considered within the standard range for a chemical production unit.

In terms of prices, the chemical industry experienced a 12.7% deflation in 2023, mirroring trends in the international market.

The chart below presents data on Brazilian chemical imports from China (hs code 28 and 29) between Jan 2022 and Dec 2023. The data is from DataLiner.

Imports of Chemicals | Jan 2022 – Dec 2023 | TEU

Source: DataLiner (click here to request a demo)

While Abiquim anticipates benefits from the new industrial policy and prospects surrounding the “Gasolina para Empregar” [Gasoline for Employment] program, it stresses the need for emergency action to curb the import rise.

“The current international scenario, coupled with high idle capacity and increasing imports, could jeopardize the installed base, leading to disastrous consequences for the country, including the deactivation of units, job losses, and reduced tax revenue for the sector, which is currently the largest contributor to federal taxes,” the executive added.

According to Abiquim, the decline in chemical production in 2023 resulted in nearly R$8 billion in lost revenue from federal taxes.

Source: Valor Econômico

Click here to read the original news report: https://valor.globo.com/empresas/noticia/2024/02/27/quimicos-importados-atingem-fatia-recorde-de-47percent-no-consumo-brasileiro-em-2023-indica-abiquim.ghtml

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