Abiquim believes in a resumption for the chemical industry in 2023, despite the deficit
According to Abiquim, imports of chemical products totaled US$ 9.7 billion, while exports exceeded US$ 2.3 billion in the first two months of 2023. Compared to the same period last year, there was a decrease of 8.3% , on imports, and 7%, on exports. From March 2023 to February 2023, the deficit in chemicals amounted to US$ 62.3 billion.
The missions foreseen in the agenda are focused on making new production chains viable: natural gas; use of bioproducts; diversification of the energy matrix; and promotion of sanitation, as detailed by the association:
- Natural gas mission: aims to make new production chains viable by maximizing the use of natural gas as a competitive raw material from the pre-salt layer, reducing the country’s vulnerability in agribusiness, for example, from the production of fertilizers and many other chemical products.
- Bioproducts Mission: focuses on expanding the production of chemicals from plant biomass, replacing traditional inputs of fossil origin. These products are strong drivers of innovation and technological development, not to mention the effect with regard to the circular economy and sustainability in general.
- Renewable Energy Mission: the chemical sector intends to diversify its energy matrix with increasingly cleaner sources, with a low carbon dioxide footprint and which are already cost-competitive, such as solar, wind and biomass, in addition to enabling the production of green hydrogen and green ammonia. These are solutions that leverage sustainable chemical chains, as well as favor the electro-intensive production of many other products in the chemical industry.
- sanitation mission: very important in a country like Brazil to encourage investments and provide a favorable environment for the development of opportunities arising from the new legal framework for basic sanitation.
Causes of the deficit
In addition to the difficulties for economic recovery after the Covid-19 pandemic, Abiquim also points to the conflict in Eastern Europe, between Russia and Ukraine, as one of the main factors influencing the deficit registered by the chemical sector of the industry.
“Brazil was greatly affected by this context, especially our chemical industry, which basically depends on raw materials and energy, especially gas. The gas crisis had an impact on the price dynamics of the international market, culminating in record production and logistics costs, billing, imports, but also a deficit, which strongly pressured the sector”, says the institution.
In this context, the chief executive of Abiquim, André Passos Cordeiro, argues that the then Brazilian government took decisions, according to him, that were wrong for the moment in terms of tax policy. He claims that the reduction of import taxes on thermoplastic resins has harmed the chemical sector.
“This led to an increase in imports and affected the minimum profitability of companies that produce in Brazil, leading to the stoppage of entire production lines and a reduction in the use of capacity in Brazil. Our expectation is that the current government reverses this in time to prevent the crisis in the sector from getting worse and jobs being cut and exported outside the country,” he points out.
In 2022, the recorded deficit was US$ 64.8 billion, the largest in history. In 10 years the deficit of the chemical industry more than doubled. Abiquim attributes the fact to the high Brazil Cost — difficulties and bureaucracies that impede the country’s growth — and the lack of internal competitiveness.
Abiquim defends the federal government’s actions with a focus on points that can contribute to development in the short term: increasing the supply of gas; progress in tax reform; create a legal framework for green chemistry; and signal that the rules of the World Trade Organization (WTO) will be respected.
Reiq
One of the incentive measures for the chemical sector is the Special Regime for the Chemical Industry (Reiq). In December 2022, the National Congress guaranteed the maintenance of the regime until 2027, with the gradual reduction of incentives in the period. Federal deputy Alceu Moreira (MDB-RS) is in favor of strengthening the Reiq as a way of contributing to the chemical industry.
“I defend that the Reiq be reinvigorated as a public policy responsible for generating jobs and income in the country. That’s what the numbers say. In addition, it should be noted that the chemical industry plays an important role for several production chains. Changing it directly impacts other segments of the economy”, says the congressman.
The incentive was created in 2013 as a way of promoting the chemical sector to compensate for differences in the tax burden between countries and make the national industry more competitive. According to Abiquim, the regime contributes to maintaining 85,000 jobs and its abrupt end would lead to a reduction of R$ 5.7 billion in the country’s Gross Domestic Product (GDP).
Alceu Moreira argues that legal uncertainty is one of the main problems faced in the country. “The business environment in the country is still made up of a series of obstacles, the lack of legal certainty being the main one. The chemical industry is no exception with regard to sudden changes in import rates, causing uncertainty in the market. These are ways to be corrected to ensure that Brazil is competitive”, defends the deputy.
By Brasil 61
