Brazil wants more in country fertilizer investment

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The Brazilian chemical industry, especially the fertilizer sector, could have trouble gaining investments in the near future, according to the president of Abiquim, the chemical industry association.

Fernando Figueiredo contends the cost of investment in Brazil is 25 percent higher than in Asia and 10 percent higher than in the U.S., and that Brazilian petrochemical feedstock is not competitive with feedstock derived from shale gas in the U.S., the Business News Americas reported, based on a recent interview conducted by O Estado de SaoPaulo.

Figueiredo estimated that around $13 billion of planned investments in new Brazilian production capacity for raw materials of fertilizers are currently on stand-by. Developing new production in the country is not necessary because fertilizer imports are exempt from import duty, he claims.

Abiquim expects Brazil's trade deficit in fertilizers to rise to $10 billion for 2013, up from $8.5 billion in 2012. Figueiredo said that if Brazilian mining company Vale and national oil company Petrobras go ahead with new fertilizer plants, domestic production could supply 48 percent of Brazilian fertilizer demand, up from domestic fertilizer provided at 28 percent of the nation’s needs in 2012.

Abiquim expects Brazil's total trade deficit in chemicals to widen to $32 billion when all totaled for 2013 and rise to more than $35 billion in 2014, both of which are much higher than the $28.5 billion trade deficit in 2012.

Investment in Brazil is associated with the value of Brazilian money, the real, Figueiredo told the Business News Americas report that the exchange rate for the real needs to fall to 2.60 to the U.S. dollar from current levels of around 2.35 if Brazil is to reduce its imports of chemical products.

Figueiredo further suggested that Brazil also needs to diversify away from oil and invest in natural gas and renewable raw materials if its petrochemical industry is to regain competitiveness.


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