Brazil chemicals deficit hits $49 billion in 2024 despite higher tariffs by year-end

SAO PAULO (ICIS)–Brazil’s chemical industry posted a $48.7 billion trade deficit in 2024 as imports surged to $63.9 billion, driven by “predatory pricing” from US and Asian suppliers, the country’s chemicals trade group Abiquim said.

Asian suppliers, moreover, benefited from discounted Russian raw materials and, in China’s case, from heavy subsidies from the state, the trade group added.

The overall deficit, while substantial, remained below the 2022 record of $63 billion, though Abiquim noted this was primarily due what it described as “predatory import pricing” which cushioned the “real imbalance” in the trade balance.”

Import volumes rose 11.5% to 65.3 million tonnes of chemicals, with fertilizer intermediates accounting for 41.1 million tonnes, up 7.4% from 2023.

This marked the highest import volume since records began in 1989, as Asian suppliers leveraged cheaper Russian materials amid the war in Ukraine.

Abiquim’s CEO said 2024 had been challenging for Brazil’s chemicals producers, although the year was also marked by the higher import tariffs approved for 30 chemical products, which gave the sector a boost in November and December, said Andre Passos.

Following October’s tariff implementation, domestic production rose 6.35% in the final two months, he added.

The trade group’s CEO said higher tariffs were a welcome step but much more needed to be done to protect Brazil’s chemicals producers’ operations and their transition to the green economy.

“We know that this [higher tariffs] is just the first step and it is essential to keep facing up to the extremely adverse international scenario, with excess production capacity for chemical products in the world and heavy subsidy programs in the world’s main chemical producers,” said Passos.

“We are crossing the gateway to the low-carbon economy and the chemical industry is ready to lead this transition. Low-carbon chemistry is related to the use of technologies that reduce or neutralize greenhouse gas emissions.

“Renewable chemistry, carbon capture and storage, and chemical recycling are some examples of this leadership that can be exercised by the Brazilian chemical industry,” he concluded.

ASIA DOMINATES
Asian suppliers, excluding the Middle East, dominated imports with a 31% share worth $19.6 billion, creating an $18 billion regional trade gap.

The deficit with Asia has steadily worsened from $10bn in 2020 to $16.2bn in 2023, said Abiquim, reflecting China’s overcapacities and the country’s switch from net importer to next exporter for most chemicals.

Domestic manufacturers faced increased competition across all segments, with imports of resins and elastomers jumping 32.4%, organic chemicals 14.3%, inorganics 9.1%, and other industrial chemicals 9.3%.

Import prices averaged 6.3% lower than 2023, leading to domestic plant closures, said Abiquim.

Brazilian chemical exports rose 4.3% to $15.2 billion, though volumes dipped 0.2%.

The sector maintained its position as the country’s third-largest manufacturing exporter, behind food products at $66.5 billion and base metals at $23.2 billion, said Abiquim.