Brazil’s fertilizers producer prices down sharply in April, all chemicals subsectors post falls

SAO PAULO (ICIS)–A fall of nearly 6.5% in Brazil’s fertilizers producer prices in April, month on month, dragged down overall chemicals prices, the country’s statistics body IBGE said on Tuesday.

Overall chemicals prices fell 2.61% in April, compared with March, as all subcategories posted falls.

It is the 10th consecutive monthly fall in chemicals producer prices, said IBGE.

Moreover, chemicals was the largest contributor to the overall fall in industrial producer prices, down 0.35% month on month.

“The three groups [for which prices are] released – manufacture of inorganic chemicals, manufacture of resins and elastomers, and manufacture of pesticides – dropped,” said Murilo Lemos, analyst at IBGE.

“However, manufacture of inorganic chemicals, which includes fertilizers, stood out. That group registered a drop of 6.39% in the comparison between April and March.”

According to IBGE, the cumulative rate in overall industrial producer prices for the past 12 months fell 4.63%, the biggest drop in the time series for this indicator, started in 2014.

Producer prices fell in 12 out of 24 industrial activities surveyed in April.

The falls in producer prices go in tandem with Brazil’s slowing rate of inflation, which in April stood at 4.18%, down from 4.65% in March.

BELEAGUERED FERTILIZERS
Brazil’s key agricultural sector is a large global consumer of fertilizers; the industry has been in the doldrums for months, in Brazil and practically everywhere else as high stocks and poor demand has caused sharp price falls.

“The supply of fertilizers in the world market had been impacted by the restrictions of the pandemic and became even more scarce with the war in Ukraine. Brazilian producers managed to reinforce the stocks to avoid a shortage at harvesting time,” said IBGE’s Lemos.

“Prices rose in that period, though fewer pandemic-related restrictions and the return of exports from European countries increased the supply in the second semester last year, though not followed by the demand. This impacted the chemical sector as a whole.”

The outlook for the fertilizers sector remains woeful; in this podcast, the ICIS fertilizers team analyses the outlook for the sector for the remaining of 2023.

DIESEL, JET PRICES FALL
Producer prices for petroleum refining also fell notably, and the sector was the second largest contributor to the monthly fall after chemicals.

According to Lemos, some derivatives, such as diesel fuel and jet kerosene, posted sharp falls.

“Usually not a highlight, biodiesel stood out this month with a reduction due to the drop in the prices of soybean oil, its major raw material,” said Lemos.

“On the other hand, ethyl alcohol rose due to the increase in the prices of sugarcane, whose supply reduced due to weather issues.”

AUTO: HEADING TO THREE YEARS OF RISES
One of the sectors to post higher producer prices in April was the petrochemicals-intensive automotive, up 0.16% compared with March.

The sector’s producer prices have posted 34 consecutive months of increases, said IGBE.

The cumulative rate for the past 12 months in automotive producer prices rose 6.08%.

“It rose for nearly three years in a row, which can be justified by an increase of costs. They have been facing a crisis in the semiconductors since the beginning of the pandemic, which impacts on the acquisition of inputs for cars,” said Lemos.

“Yet, the change is not so high in absolute terms and compared with other activities surveyed.”

To compile the IPP index, IGBE surveys around 2,100 enterprises about the prices received by producers, free from tax, tariffs and freight; it collects nearly 6,000 prices.