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Chinese chemical imports soar by 70%, increasing Brazilian idleness

Oct, 04, 2023 Posted by Gabriel Malheiros

Week 202339

Imports of Chinese chemical products, taking into account a basket of 77 inputs important to the domestic chemical industry, jumped 70% in the first half of the year, increasing the idleness of petrochemical plants and factories in the country, which currently stands at around 30%, according to a survey by the Brazilian Chemical Industry Association (Abiquim).

During the same period, domestic production of chemicals for industrial use fell by 10%, while imports rose by 8% in volume. “This is a very serious moment, with an outbreak of imports based on artificial prices,” said André Passos Cordeiro, the association’s head.

According to the executive, the pandemic has already disorganized the global chemical industry. With Russia’s invasion of Ukraine, Asia now has access to cheaper raw materials, prompting producers in the region to cut prices even further.

On the consumer side, major centers such as Europe and the United States adopted protective measures –the U.S. government had already imposed a 25.7% tariff on various Chinese products, including chemicals– and volumes were diverted to unprotected markets such as Brazil.

“We are more dependent on imports than in the recent past. The numbers can be confusing because there has been a drop in international chemical prices, but in terms of volume, there has been an increase in imports,” he said.

Even with the reduction in the trade balance figures in 2023 amid the sharp price correction, import figures remain well above those seen before the pandemic, with growth of up to 83% depending on the month, according to Abiquim.

Since the beginning of the year, foreign purchases on a monthly basis have ranged between $5 billion and $5.5 billion, compared to the range of $3 billion to $4.5 billion seen before the coronavirus pandemic. The only reason the new monthly level isn’t higher is because of price adjustments. On average, the value of imported chemicals fell by 17% through August.

As a result, in monetary terms, Brazilian imports of chemical products during this period totaled $41.9 billion, 24% less than the previous year – considering August 2023 versus August 2022, the reduction in average prices reached 39.1%, to $955 per tonne from $1,569 per tonne.

For the São Paulo industry, the executive said, the impact of the increase in imports is also relevant: nine of the 77 products that make up the basket of imports from China correspond to 40% of the turnover of the so-called ABC petrochemical hub, in São Paulo.

Source: Valor Econômico
To read the original news report, visit: https://valor.globo.com/empresas/noticia/2023/10/04/importacao-de-quimico-chines-salta-70-e-eleva-ociosidade-no-brasil.ghtml

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