Brazil hikes import tariffs for polymers and tyres to protect domestic producers

SAO PAULO (ICIS)–The Brazilian government has sharply increased import tariffs for some polymers and tyres, the Foreign Trade Chamber (Camex) said over the weekend.

According to the government body, low import tariffs for some plastics has had “harmful consequences” for the Brazilian chemical sector as imports have risen and domestic prices have fallen.

“The [plastics] segment has already registered a stoppage in at least one PET [polyethylene terephthalate] resin production line in Pernambuco [state],” said Camex.

However, a source in Brazil’s petrochemical industry which imports a large amount of polymers said the measure was a “negative” surprise and companies had not been warned in advance.

Brazil import tariffs	New	Old
Ethylene copolymers	11.2%	3.3%
Propylene copolymers	11.2%	4.4%
Polyvinyl chloride (PVC)	11.2%	4.4%
Polyethylene terephthalate (PET)	11.2%	4.2%
Tyres	16%	0%

Camex also said Brazilian tyres producers had been “facing a drop in production” caused by an increase in imports and as a result, producers were threatening to “paralyse production and carry out layoffs.”

However, it did say that after an increase in import tariffs, tyre producers had “signalled the retreat” with their threats to stop production and lay off workers.

Tyres are a key end market for styrene-butadiene-rubber (SBR).

Tariffs for propylene homopolymers were confirmed at 6.5% until July at the earliest.

‘NEGATIVE SURPRISE’
A source from Brazil’s petrochemical industry, which imports a large amount of polymers, mostly from Asia, said the increase in tariffs had come as a “negative surprise” and was not happy that companies had not been notified in advance about the changes.

The source said “it is not clear what’s going on” with the current government presided by Luiz Inacio Lula da Silva, especially with regards to tax policy, and the sudden hike in import tariffs fell under that dynamic.

“This government doesn’t make some things clear, especially for small companies like ours. Today [Friday 17 March], we received information that import tariffs for some materials will be higher. While this was expected to happen, it wasn’t expected to happen now,” the source said.

“We import a large amount of polymers including PET, so this has come as a very negative surprise. We are checking now how much this will increase our costs.”

Brazil’s chemicals and plastics trade groups, Abiquim and Abiplast, respectively, had not responded to a request for comment at the time of writing.