The Brazilian chemical industry’s idle capacity rose to 38% in the first quarter of 2025, the highest level in 30 years, with production, internal sales and apparent consumption all lower, according to the country’s industry association Abiquim, as per Chemweek.Output fell by 3.8%, domestic sales declined by 2.6% and apparent consumption — production plus imports minus exports — contracted by 5.3% in the first quarter compared with the year-earlier period, according to Abiquim’s latest Economic Monitoring Report.“These figures highlight the persistent loss of competitiveness in the global market, particularly due to unfair competition from imported inputs, mainly from the US and Asia, along with high energy, natural gas and tax costs,” it said June 24.In foreign trade data, Brazil imported $66 billion and exported $16 billion in chemical products from April 2024 to March 2025, resulting in a trade deficit of $50 billion during the period, surpassing the $49 billion deficit in 2024.In response to challenges posed by competitive imports and low comparative advantages, Brazil’s federal government has introduced various policies and incentives.Despite the overall negative outcomes for the industry, Abiquim said the government’s decision to raise import taxes on 30 chemical products from October 2024 to October 2025 by including them in the List for Conjunctural Trade Imbalances has produced positive effects.In the first quarter of 2025, the import penetration coefficient — measured by the share of imports in apparent consumption — fell to 43%, down ten percentage points from 53% in the year-ago period.From April 2024 to March 2025, production was up 3.4% on the year-ago period, while domestic sales were up 6.7%, prices were up 12.9% and apparent consumption was up 3.2%.Imports rose by 5.9%, with the import penetration coefficient reaching 49%. Notably, imports of thermoplastic resins surged by 23.7%.With the increased import tax and the Special Tax Regime for the Chemical Industry, or REIQ, proving insufficient to revitalize the industry, Abiquim emphasized the critical importance of the Special Sustainability Program for the Chemical Industry, or Presiq.
Presiq, approved by the Chamber of Deputies and set for discussions in the House’s Environment Committee, seeks to enhance competitiveness and sustainability in the sector through fiscal incentives for low-carbon production processes.
Market participants say that government measures are unlikely to significantly improve the national industry, primarily due to the reliance on more expensive naphtha as feedstock, in contrast to the cheaper natural gas available in the US or the Middle East.Moreover, the downturn in the chemical sector has impacted recycled polymer markets, according to sources, rendering demand for these materials unviable as virgin alternatives continue to be competitively priced.
mrchub.com