Production of industrial chemicals falls more than 8% in the first quarter

According to preliminary data from the Brazilian Chemical Industry Association – Abiquim, from January to March 2018, the domestic sales index grew 3,03%, compared to the same period last year, however in the months of January and February the increase had been 6,36% compared to the same months in 2017. Production fell 8,03% in the first quarter of the year compared to the same period in 2017, the drop is justified by scheduled and unscheduled stops for maintenance, especially in Northeast region of the country, including the effects and impacts of the blackout that occurred on March 21st. “Chemistry works in a continuous process and the resumption of activities in industrial plants, especially in unexpected shutdowns, can take an unpredictable amount of time, in this case more than a week”, explains the director of Economics and Statistics at Abiquim, Fátima Giovanna Coviello Ferreira .  

National apparent consumption (CAN), which measures production plus imports minus exports, registered a reduction of 12,9% in the first quarter of the year compared to the same period in 2017. In addition to the drop in production, the index was affected by the reduction of imports of intermediates for fertilizers, due to the adjustment in stocks and the forecast that the agricultural grain harvest will decline, in volume, by around 11% in 2018, compared to last year's harvest.

Due to the drop in production, the capacity utilization rate was just 73%, a performance below that obtained in the same period last year, with a drop of six percentage points. The average occupancy rate over the last 12 months was 78%, two points below that seen in the immediately previous 12 months. The worsening of production was also reflected in exports of domestically manufactured products, which declined by 28,2% in the first three months of 2018, compared to the same period last year.

In the last 12 months ending in March 2018, it is possible to notice a strong slowdown in production in relation to the immediately previous twelve months. After 27 months of positive results, the production index reversed its sign, showing a decline of 1,16% from April 2017 to March 2018, in relation to the immediately previous 12 months. “In addition to the scheduled and unscheduled shutdowns in March, the sector was also affected by the interruption in the supply of basic raw materials in some regions”, explains the director of Abiquim.

“Despite the recent slowdown, the industry is more optimistic, especially with the decline in inflation, the results of national accounts and the maintenance of falling interest rates. The recovery of economic activity in Brazil and around the world, and preliminary indications of growth above the general average, after three years of decline, in Brazil's total and industrial GDP, generate positive prospects for the coming months. However, this improvement in the environment has not yet been reflected in the return of investments in chemistry and the improvement in the rate of hiring. Because, the idleness of the plants and the uncertainties regarding the political framework, with no trend regarding who will be the next President and what the economic strategy of the new team will be, inhibit expansion plans in the country”, says Fátima.