Brazil’S Chemical Industry’S Trade Deficit Soars To $50 Billion

(MENAFN- The Rio Times) The Brazilian chemical industry faces a growing trade deficit, reaching $50.1 billion in 2024. This figure stems from estimated imports of $65.1 billion and exports of $15 billion.

The deficit has increased by 7.5% in value and 16.3% in volume compared to the previous year. Brazil's chemical sector, once the fourth largest globally, has slipped back to sixth place.

This decline occurred despite temporary gains during the pandemic. The industry now grapples with compressed margins and global trade tensions. Production growth for industrial chemicals is projected at a mere 1.1% for 2024.

This modest increase fails to boost factory utilization rates, which remain at a historic low of 64%. The sector's trade deficit for industrial chemicals alone is expected to reach $38.1 billion, a 7.3% increase.

André Passos Cordeiro, CEO of Abiquim, predicts challenges will persist until 2028 or 2029. This aligns with the global petrochemical industry's downturn.



However, the sector has achieved some victories, including the preservation of the Special Regime for the Chemical Industry (Reiq). The government's failure to recognize the temporary nature of 2021-2022's positive circumstances has had consequences.
Challenges Facing Brazil's Chemical Industry
The Reiq program, which provided tax credits, saw a significant reduction. Simultaneously, authorities lowered import taxes, driving a 32% surge in imports of key chemical products in 2023.

Recent policy adjustments have partially addressed these issues. Import tariffs were normalized in 2023, and the Reiq program was reinstated. However, these measures may not be sufficient to counter global pressures.

The ongoing trade war between China and the United States adds further complexity. China, controlling 44% of the global chemical market, offers 1,800 different incentive lines for its chemical industry . This aggressive expansion aims to dominate global pricing.

As imported products continue to flood the Brazilian market, the chemical industry faces mounting pressure. The sector's brief respite in 2023, due to falling international prices, has given way to renewed growth in the trade deficit.

This situation underscores the need for strategic planning and policy support to enhance the competitiveness of Brazil's chemical industry in an increasingly challenging global landscape.

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