Brazil chemical industry concerned by lower import rates

Brazil's chemical industry has voiced concern about the government's decision Thursday (Aug 1) not to renew the higher level of import duties it imposed on a range of chemical products last year.


From October, the import duties will revert to their lower level, making imports cheaper and threatening the market share of local producers.


"We are extremely concerned," Fernando Figueiredo, president of chemical industry association Abiquim told Valor Econômico. "The trade deficit in chemicals could reach US$33bn this year."


Last year Brazil recorded a record trade deficit of US$28.1bn in chemical products.


The cut in import duties affects 20 chemical products involving seven major chemical companies: Oxiteno (part of conglomerate Ultrapar (NYSE: UGP)), ElekeirozBasf (NYSE: BF), Braskem (NYSE: BAK), UnigelDow (NYSE: DOW) and Lanxess.


Some companies are considering closing production units, Figueiredo said.


According to Abiquim, despite the higher import duties, imports of the 20 products increased to US$954mn in the first half of the year, 6% more than in the same period in 2012.


Henri Slezynger, president of Unigel, said the depreciation of the Brazilian real against the dollar would not provide protection for local products from imports, as chemical prices are dollarized because the main raw material, naphtha, is priced in dollars.