Chemical Industry Federations Urge Brazil to Raise Import Tariffs on 65 Products

Federations of industries from four Brazilian states have joined forces with the country’s chemical industry to request a hike in import tariffs on 65 chemical and petrochemical products. In a letter sent to the federal government on August 28, they urged Vice President Geraldo Alckmin, also Minister of Development, Industry, Commerce, and Services, to approve the proposed tariff modifications presented by Abiquim (Brazilian Chemical Industry Association) at the next Camex meeting.

The letter is signed by the Federation of Industries of the State of Rio de Janeiro (Firjan), the Federation of Industries of the State of Bahia (Fieb), the Federation of Industries of the State of Alagoas (Fiea), and the Federation of Industries of the State of Rio Grande do Sul (Fiergs). Each of these states has significant petrochemical operations or hubs.

The chemical sector has been warning authorities for months about a surge in imports of various petrochemical products at predatory prices. As a result, it has requested Camex to temporarily raise import tariffs on 65 HS codes, including thermoplastic resins, to curb the influx of imports into the Brazilian market. HS codes are regional nomenclature codes used to categorize goods in Mercosur countries.

Last year, imports of these 65 products increased by 31.2% in volume. Meanwhile, the Brazilian industry recorded its highest level of idle capacity in 30 years at 36%.

The chart below builds on DataLiner-derived data to explore Brazilian imports of chemicals between January 2021 and July 2024. Readers may request a demo using the link below.

Imports of Chemicals | Jan 2021 – Jul 2024 | TEUs

Source: DataLiner (click here to request a demo)

Support for the New Brazil Industry Program (NIB)

In their letter, the federations reiterated their support for the New Brazil Industry Program (NIB), a long-standing proposal by the private sector to address barriers to increased competitiveness and productivity in the national industry, many of which are external to the companies themselves.

However, they pointed out that the effects of this industrial policy will not be immediate, especially as various countries have adopted measures to bolster their industrial sectors. “This is the case for the Brazilian petrochemical industry. We have one of the largest global consumer markets and a broad and diverse petrochemical complex, but we lacked oil and gas,” the letter states.

“It is inconceivable that today, when we have become one of the largest exporters of oil and with growing gas production, we watch passively as our industrial base, built with great effort, is undermined by active policies from other countries that offload production surpluses at cost or even below cost into the domestic market,” the federations add.

According to Abiquim, Brazilian production of industrial chemicals fell by 1.14% in the first half of the year, while export volumes declined by 27.5%. This highlights the difficulty of Brazilian products competing in the international market.

Domestic sales increased by 4.39%, and apparent consumption (CAN) grew by 0.4%, driven by a 4.5% rise in imports. During the first half of the year, imports accounted for 45% of Brazilian demand.

The industry’s average capacity utilization rate was 63% for the semester, three percentage points lower than a year earlier. In fertilizers, the decline was nine percentage points to 58% due to the closure of two Petrobras fertilizer plants leased to Unigel.

The petrochemical industry suspended activities at fertilizer mixers months ago, as the business became unprofitable with falling urea prices in the international market, while the raw material (natural gas sold in Brazil) did not exhibit the same behavior.

Source: Valor Econômico

Click here to access the original news report: https://valor.globo.com/empresas/noticia/2024/08/29/em-carta-ao-governo-federacoes-de-industrias-defendem-elevacao-da-tarifa-de-importacao-de-quimicos.ghtml

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