How Brazil can raise the value of its chemical industry

Forbes, 01/27/2016

Brazil’s chemical industry has grown significantly over the past 15 years, but an increasing portion of growth is due to imports—an alarming trend for chemical companies and the businesses that depend on them.

Prior to 2007, the industry’s trade deficit ranged from $6 billion to $9 billion, but by 2014, it had risen to $31.2 billion. Two main factors contributed to the deficit. First, domestic consumption grew faster than production, as rising income spurred chemicals consumption, which outstripped corresponding investments in local production capacity. And second, the import of high-value chemicals grew faster than exports, in part because Brazilian companies are better positioned to produce lower-value commodity chemicals.

Left unchecked, this trend could threaten the sustainability of Brazil’s chemical industry. Rising imports of finished products often correlate with lower domestic production of the chemicals used in those products—for example, in tires, textiles and toys.

 

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