Brazil’s Senator, manufacturers aiming to overturn higher chemicals tariffs, charge against Braskem

SAO PAULO (ICIS)–Brazilian senator Sergio Moro this week rallied plastic manufacturers against the October increase in import tariffs arguing it primarily benefits petrochemicals major Braskem by protecting its sales in the domestic market.

In a public hearing in Brazil’s parliament second chamber, former judge Moro criticized the import tariffs increase – most of them from 12.6% to 20.0% – highlighting that they are to benefit mostly Braskem due to its near-monopoly in Brazil’s resins production.

The company holds predominant positions in the production of polyethylene (PE) and polypropylene (PP), among others. The company is controlled by Novonor (formerly Odebrecht) but state-owned energy major Petrobras also holds a significant stake.

This week, the trade group representing chemicals producers in Brazil, Abiquim, in which Braskem has a commanding voice, said the higher import tariffs were not to benefit only Braskem or the chemicals industry itself, but the whole manufacturing sectors which have been pressured by cheaper material produced overseas.

Braskem had not responded to a request for comment at the time of publication.

PUBLIC ENQUIRY
Some manufacturers, including the trade group representing plastic transformers Abiplast, are pushing for a parliamentary inquiry (CPI in Brazill’s parliamentary jargon) to pressure for a return to previous rates.

In their view, more expensive imports will ultimately be passed onto consumers, and therefore feed inflation.

Senate leaders, however, concede that success in setting up a CPI is unlikely.

“It is clear that it is necessary to defend the national industry, especially against unfair competition,” said Moro in a public hearing.

“There is a very significant detail, however, since the production of these plastic resins in Brazil is almost a monopoly of a single company, Braskem.”

Braskem’s CEO, Roberto Ramos, skipped the hearing despite being summoned.

UTILIZATION RATES HIT LOWS
Abiquim, which for months lobbied the government to increase import tariffs, said this week the Senator’s moves and those by companies and trade groups to lower import tariffs were missing the key point that Brazilian industry needed protection from some imports “predatory prices.”

The trade group argued the government’s decision to hike tariffs in dozens of chemicals was accompanied by other tariff increases as well as non-tariff measures to protect the competitiveness of industrial sectors such steel, glass, tires and paper.

According to figures by Abiquim, imported chemical products’ share of the Brazilian market reached 49% between 2000 and 2024, leading to record 36% idle capacity in the domestic chemical industry.

“Abiquim believes that the Brazilian government correctly acted with an emergency and high-impact measure to correct the surge in imports, which unfortunately led to the halt of production in the chemical sector,” said the trade group.

“Therefore, Abiquim reaffirms that the measure that defends the chemical sector as a whole is part of the same correct technical process of defending sectors of the Brazilian industry attacked by unfair and predatory imports.”

It conceded, however, that Brazil has an “structural challenge” with the competitiveness of its industry while admitting higher import tariffs – set to be in place for 12 months – were just a temporary measure to “stimulate production” domestically.