Brazil's polymer market expects higher import duties renewal, government analyzes the request

Traders in Brazil's polymer market anticipate the renewal of higher import duties, viewing the extension as a certainty amid ongoing discussions regarding antidumping duties for polyethylene, sources told Platts on July 4.

The Brazilian Ministry of Development, Industry, Commerce, and Services, or MDIC, is analyzing a request from the Brazilian Chemical Industry Association, or Abiquim, to renew the validity of a petition that increased the import duties for several chemical products.

The initial claim, in effect since October 2024, proposed higher import taxes to be applied for one year. According to Abiquim, the decision to extend its applicability for another 12 months will be announced in the coming weeks.

The MDIC stated that the prolongation request "was filed in April and was open for public consultation until June 9, allowing for free expression from interested parties."

The ministry also mentioned that the matter "is currently under technical analysis and will be submitted for deliberation by the Executive Management Committee before the current measure's validity period expires," which is expected to happen in October.

The Brazilian government is also investigating an antidumping scenario against US PE. In May, an increase in US PVC import duties was approved at 43.7%, from the previously applied 8.2%, as an antidumping measure.

"It would be somewhat contradictory to impose a 40% antidumping duty and then lower the regular import tax," a PVC trader said, adding that the market was already "taking it for granted" that the petition for higher import duties would make it permanent.

Similarly, a PE, PVC, and polypropylene trader stated that Abiquim's request "was already expected" because "the market has already adjusted to this rate."

"And with rumors of antidumping, there is no possibility of backtracking," the same source added.

Petition effects

The request covers 30 chemical products, such as PE, PP, and PVC, whose rates increased from 12% to 20%.

Brazil is a net importer of resins, as the local production faces challenges competing with international prices and production capacity to supply the entire market.

Abiquim stated that since the temporary increase in October 2024, the share of imports in the country's consumption has decreased by 4%.

There is no clarity regarding a potential increase in the market share of domestic producers among participants in the Brazilian industry sectors that demand resins.

Regarding PVC, the antidumping measures against US material, one of Brazil's main suppliers until then, have raised market participants' doubts about how these volumes will be replaced. The expectation is that local producers Unipar and Braskem will cover part of this gap, leaving suppliers from other countries to cover the rest.

Amid supply uncertainties, Platts, part of S&P Global Commodity Insights, last assessed spot PVC at $980/mt CFR Brazil, including duties, on July 2, up $80 week over week.

Similarly, in the case of PE, discussions are underway regarding antidumping duties also against US and Canadian material. Uncertainty elevated throughout June, when market participants expected the request filed by the local producer Braskem would be analyzed at a June 30 meeting by the Chamber of Foreign Trade.

General market sentiment was more optimistic after the meeting's agenda did not include the dumping investigation on PE imports from the US. "Now we see more customers buying, even as prices increased on the week," said a PE trader. Other market participants still believe an AD duty on US and Canadian cargoes can be applied, but the deadline remains uncertain.

The US represented 71% of total PE imports in Brazil from January to May, according to data from Brazil's Ministry of Development, Industry, Commerce and Services. An additional duty applied to US cargoes can alter market fundamentals, according to sources.

Countries such as Israel, Egypt, and Mercosur components and partners, like Argentina and Colombia, which hold bilateral agreements with Brazil, are exempt from the 20% import duty.

In some markets, those suppliers have gained significant market share, such as Colombia's PP imports to Brazil, which now represent 21% of the market, according to data from Brazil's Ministry of Development, Industry, Commerce and Services.

Platts last assessed spot HDPE film pricing at $975/mt on July 2. In the domestic market, spot HDPE film was at Real 10,300/mt on July 2, up Real 500 week over week.