Brazil's government has started an anti-dumping investigation into polyethylene (PE) produced in the US and Canada.
The country's foreign trade committee Gecex launched the investigation on 13 November following allegations from the sole Brazilian PE producer, major petrochemical company Braskem, that these countries are exporting PE to Brazil at prices below what is considered fair market value.
Overall imported PE prices into Brazil have been in a downward trend since July, pushing down Braskem prices in the domestic market.
Gecex said it will analyze export prices and compare them with those in the domestic markets of both countries. If dumping is confirmed, corrective measures may be applied to protect the Brazilian industry.
A preliminary analysis has identified significant evidence of dumping, justifying the continuation of the investigation, Gecex said. It added that there was a considerable increase in PE imports from these countries — especially from the US — during the period being investigated, which may have contributed to the decline in domestic prices and harmed the domestic producer.
The preliminary analysis of dumping evidence covered 1 April 2023 to 31 March 2024. The damage analysis period extended from 1 April 2019 to 31 March 2024.
The anti-dumping investigation into PE imports from the US and Canada was preceded by an increase in import taxes on a number of polymers and chemicals to 20pc from 12.6pc, including PE, polypropylene (PP) and polyvinyl chloride (PVC), effective since 15 October.
Repercussions
An international trader specializing in polymer imports into Brazil told Argus that if anti-dumping duties are applied, his company's PE imports from the US to Brazil could drop by 20-30pc.
"The decision has a 10-month deadline to be presented, but I believe it will be implemented and possibly announced earlier," he said, adding that this is another Braskem maneuver to regain its traditional 70pc market share in the Brazilian market.
If confirmed, the measure is expected to have a significant impact on the Brazilian economy, especially on the plastic products manufacturing industry, as imports of finished plastic products could rise substantially, the trader said.
One US-based trader selling US and Canada PE into Brazil sees the possible application of anti-dumping measures on the products as a structural development.
"We will need to source PE in different production regions such as Asia and the Middle East, developing new ways of logistics, cash flows, ways of payment, to make it work flawlessly as it currently works with North American PE," the trader told Argus. "Prices should go up and we will increase our margins on PE sales."
Brazil's January-September PE production increased by 1pc to 1.7mn t from the same period in 2023, while domestic sales fell bu 2pc to 1.24mn t. In contrast, PE imports jumped by 45pc to 1.54mn t, resulting in an apparent consumption of around 2.8mn t, up by 20pc higher year-on-year and a record high.
