Brazil's Chemicals May Hit Second-Largest Trade Deficit in History

Recently, statistics released by the Brazilian Chemical Industry Association show that in the first 10 months of this year, the Brazilian chemical industry's import volume reached a total of 52 billion U.S. dollars, while its export volume was only 12.2 billion U.S. dollars, with a trade deficit of 39.8 billion U.S. dollars. The association predicts that the trade deficit of Brazil's chemical industry will reach 47 billion US dollars in 2023, making it the second largest trade deficit in history.

According to the Brazilian Chemical Industry Association, the huge trade deficit in the Brazilian chemical industry this year reflects the dominance of cheap chemicals imported from Asia, while the output of the Brazilian chemical industry is at the lowest level in 30 years, forcing the average idle rate of production lines down to 35% of capacity.

In the first 10 months of this year, the import volume of plasticizers, thermoplastic resins, basic petrochemical products, detergent chemical intermediates and various other industrial chemicals in the Brazilian chemical industry surged 79.1% year-on-year. On the other hand, chemical exports from the Brazilian chemical industry totaled 11.7 million tons in the first 10 months of this year, a year-on-year decrease of 11.3%. Imports from Brazil's main trading partner have been replaced by Asian products benefiting from Russia's cheap gas and energy supplies.

Fátima Giovanna Coviello Ferreira, director of the Brazilian Chemical Industry Association, pointed out that the trade balance of the Brazilian chemical industry in the first 10 months of this year is worrying. The government's recent decision to restore import duties on chemicals to the standard level of the Common External Tariff is crucial, but further steps are needed to restore competitive conditions for the domestic industry. The association strongly calls on the government to continue to take other fundamental and urgent measures, including the temporary list increase of Mercosur’s common external tariff on chemicals most affected by cheap chemical imports.