Brazilian Polypropylene Processors Take a Sigh of Relief Due to Import Duty Cuts

Amid continuous increment in demand for Polypropylene (PP) and steep rise in its market prices, the government of Brazil has taken a swift decision to temporarily end import duty imposed on Polypropylene (PP) for 3 months. The government has decided to cap the imports of PP homopolymer at 77,000 MT for 3 months.

The move has been taken after the nation’s plastic processors urged government to take necessary action over persistent material shortage. The decision has been rolled out amidst rising fears over PP supplies in the Brazilian market as the industry fears crunch in product availability on account of upcoming planned maintenance by its leading producer Braskem at its facility in Sao Paulo. Braskem is the sole producer of PP in Brazil and leads the South American market in terms of capacity.

Recently, in January 2021, several downstream industries like packaging, automobile, agriculture etc of Brazil started experiencing shortage of PP widely used to manufacture consumer goods, and hence the Polypropylene prices started shooting up in the country. Due to its impressive qualities like stiffness, high impact resistivity and flexibility etc. this product is extensively popular in packaging industry. Furthermore, this product is globally replacing polyethylenes (PE) like HDPE and LDPE, due to its remarkable qualities like light weight and durability.

As per ChemAnalyst market intelligence, Polypropylene (PP) held the maximum demand among all the polymers in 2020, holding share of around 22.32%, followed by polyvinyl chloride (PVC, 16.23%), Polyethylene (PE, 15.31%), Polyurethane (PU, 10.98%) and Polyethylene Terephthalate (PET, 8.14%) in Brazil. The majority demand for PP in the country, comes from 3-4 sectors like consumer goods manufacturing, which accounts close to one fourth of the total demand, followed by food sector, agriculture and automotive industries.

After relaxation in COVID-19 restrictions, local demand for PP has consistently increased but the supply remained on low pace and wasn’t significant enough to satisfy this demand. This decision of temporarily removing the import duty will enhance the market sentiments of Brazil and will improve the supply activity of PP in the Brazilian market. It is also anticipated that the prices of PP will stop rising and may seek trivial downward trajectory in the upcoming months.