MURRAY ADVOGADOS

NEWSLETTER – April 2025

04/01/2025

 

CONSTRUCTION SUSTAINS STEEL DEMAND AS MANUFACTURING INDUSTRY DECLINES

Consumers complain about high prices; producers se Chinese competition as unfair

 

Amid weakened demand across various industrial sectors, the construction sector continues to sustain steel consumption in Brazil. Driven by housing and infrastructure projects, construction companies keep purchasing, while other segments are either scaling back or increasing imports to cut costs.

 

The Brazilian market is grappling with a surge of Chinese steel imports, putting pressure on domestic steelmakers’ results. Over the course of 2024, imports have reached nearly 25% of total steel consumption in some moments. However, the penetration of imports in the construction industry remained lower, as long steel products—such as rebar, bars, and profiles used in metal structures—are less vulnerable to Asian competition.

 

“If not for the domestic demand from the construction industry, 2024 would have been very challenging, possibly even resulting in losses,” said Silvia Nascimento, president of Aço Verde Brasil, noting that 2025 will resemble the past year, with construction continuing to uphold demand.

 

The construction sector has increased its steel purchases due to the growth in real estate production since the pandemic, remaining high despite rising interest rates, fueled by the My Home My Life housing program (MCMV). According to the Brazilian Construction Industry Chamber (CBIC), 60% of current steel consumption stems from real estate and 40% from infrastructure, though infrastructure projects use proportionally more steel.

 

In 2024, the number of new housing units launched in the country rose by 18.6%, according to CBIC, with 383,500 new units put up for sale, half of which belong to the MCMV, launches under this program increased by 44% in a year.

 

Companies like Gerdau benefit from this scenario, as they focus their production on long steel products. In a February interview with Valor, CFO and Investor Relations Director Rafael Japur indicated that the outlook is positive for the first half of 2025, although uncertain for the second half.

 

“There is uncertainty in some key sectors, such as construction, regarding the effects of a stronger interest rate hike and real estate financing,” he explained.

 

Rebar imports totaled 156,000 tonnes from January to September, compared to a domestic sale of 2.75 million tonnes. Although the participation is still low, it has grown since the pandemic, noted Dionyzio Klavdianos, president of the Materials, Technology, Quality, and Productivity Committee at CBIC. In 2020, the ratio was 15,200 tonnes imported to 3.28 million tonnes sold domestically.

 

During that period, steel shortages encouraged imports, which allowed the construction sector to “become more familiar” with foreign producers, Mr. Klavdianos said. Turkey is the largest rebar exporter to Brazil, but it can also come from Egypt and Latin American countries. Chinese producers do not have the required certification to sell to the Brazilian market, although they could obtain it if there is interest, the director argued.

 

“Given the increasing cost of selling to the U.S., the Chinese industry could become interested in the Brazilian market, resolve this technical barrier issue, and start to supply rebar to construction,” he pointed out.

 

Domestic producers remain the preferred choice in the segment as they offer high-quality materials and additional services, such as on-site support, Mr. Klavdianos explained. There is also a challenge for small construction companies to bear the cost of imported steel, which must be paid upfront, and a fear of confronting the steel industry, which could impose higher prices on Brazilian construction companies if the volume of imports rises too much. “You would still need to buy from them,” the CBIC director said.

 

Currently, steel is not the most burdensome material in construction projects. According to the sector’s inflation indicator, the National Construction Cost Index (INCC), rebar saw a 5.84% increase over the past 12 months, compared to a 7.32% overall indicator by March. Ana Maria Castelo, project coordinator at the Fundação Getulio Vargas’s Brazilian Institute of Economics (Ibre-FGV), noted that although other materials saw higher increases, such as PVC pipes (17.6%) and concrete blocks (8.12%), steel is extensively used in construction, so any increase is felt in the sector.

 

In addition to rebar, used in building foundations and infrastructure structures, steel mesh—which is placed inside the walls of low-income housing—is gaining ground, particularly in the sector that has grown the most in the country. As Mr. Klavdianos explains, this material is key for the reinforced concrete wall construction system, the most used in MCMV, because it reduces project completion time—the faster they deliver it, the quicker the companies receive funds from Caixa Econômica Federal.

 

The steel industry has moved to request the government to increase the import tax on wire rod, a type of steel that forms the basis for mesh—in other specifications, it is also used to make nails and wires. The matter is currently under study. According to the CBIC, 172,000 tonnes of wire rod were imported by September from the same countries producing rebar, while the domestic industry sold 1.2 million tonnes during the same period.

 

According to the director, despite government support for the national steel industry, increasing import costs would lead to a general rise in material prices, directly impacting construction costs and the attractiveness of the MCMV, one of its main programs.

 

Meanwhile, other crucial sectors for steel consumption, such as machinery and equipment, are showing reduced growth. The segment claims that rising input costs, especially domestic steel, compromise its competitiveness.

 

In an interview with Valor, José Velloso, executive president of ABIMAQ, said the machinery and equipment sector has been reducing its revenue—and therefore its steel demand—over the past decade, reflecting the segment’s contraction in the country. According to him, most companies are not large enough to buy directly from steelmakers due to the volume required. Over 90% of manufacturers source from distributors, paying higher prices.

 

“Most companies in the sector do not import steel; they are medium-sized, with a transaction volume around R$100 million. They don’t meet the minimum volume,” he explained. According to the executive, the price of the input in Brazil compared to international prices is the factor most affecting competitiveness. “The price of rolled steel increased by 12% to 17% from May 2024 to January 2025,” he pointed out.

 

Other representative entities, such as ANFAVEA (National Association of Vehicle Manufacturers), also advocate for local producers to lower their prices, arguing that the cost of domestic steel inflates final products and undermines competitiveness against international players. When contacted, ANFAVEA declined to comment. In this scenario, the price gap between Brazilian and international steel has gained prominence.

 

On the other hand, Instituto Aço Brasil—representing the country’s major steelmakers—has stated that production costs are higher due to factors like tax burdens, electricity, and logistics. Moreover, Chinese steel is subsidized by the Beijing government. The entity declined to comment on the matter.

 

Analyzing foreign trade data on steel imports, Rodrigo Scolaro, an economist at GEP Costdrivers, highlighted the increase in Chinese steel imports, particularly in flat steel used for industrial processes like machinery and automobile manufacturing.

 

“When we talk about industries importing [steel], that involves the parts industry. Last year, we had import quotas in Brazil that did not meet the desired result of curtailing imports,” he said.

 

According to Mr. Scolaro, while steelmakers are pressuring the government for trade defense measures, auto parts and automakers are working in the opposite direction, advocating against additional taxes on imported steel.

 

When contacted, SINDIPEÇAS, representing the auto parts industry, declined to comment.

 

The government is closely monitoring the situation. Discussions are underway in the Ministry of Development, Industry, Trade, and Services (MDIC) about potential safeguards or anti-dumping tariffs to curb the rise of imported steel, but no decision has been made yet.

 

Source: Valor International

https://valorinternational.globo.com

 

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04/02/2025

 

CONGRESS ADVANCES BILL ENABLING BRAZIL TO FIGHT FOREIGN TRADE BARRIERS

Proposal Inspired By U.S. Law Clears Senate And Moves To Lower House Amid Donald Trump’s Tariff War

 

The Senate approved a bill establishing legal mechanisms for the Brazilian government to retaliate against potential trade barriers or protectionist measures affecting the competitiveness of Brazilian products in international trade. Known as the Reciprocity Bill, the proposal passed on Tuesday (1) by the upper house now moves to the Chamber of Deputies for analysis.

 

The initiative gained traction in Congress amid the tariff war promoted by U.S. President Donald Trump. In addition to the previously announced 25% tariffs on Brazilian steel and aluminum imports, Mr. Trump is expected to unveil this Wednesday reciprocal trade tariffs targeting all countries. The U.S. president has dubbed the date “Liberation Day.”

 

The bill was approved by the Senate’s Economic Affairs Committee (CAE) Tuesday morning and later cleared the full Senate in an expedited process. The plenary vote became possible after the Senate president, Davi Alcolumbre (Brazil Union Party), accepted a request from Senator Randolfe Rodrigues (Workers’ Party), the government’s leader in Congress. This allowed the proposal to be immediately sent to the Lower House. If the bill had been forwarded directly from the CAE, it would have faced a five-day waiting period, as established by the internal rules.

 

After the vote, Lower House Speaker Hugo Motta (Republicans Party) said lawmakers could vote on the bill in the plenary session later this week. The rapporteur in the house will be Congressman Arnaldo Jardim (Citizenship Party). In the Senate plenary, the rapporteur, Senator Tereza Cristina (Progressive Party), said she hoped the Lower House would vote on the bill as soon as this Wednesday.

 

“As this is an exceptional matter, we are already in talks with leaders to bring it to a plenary vote this week,” Speaker Motta told reporters.

 

The proposal was drafted in consultation with the Ministry of Foreign Affairs, the Ministry of Industry and Trade (MDIC), and the private sector. It was inspired by U.S. legislation and grants powers to the Foreign Trade Chamber (CAMEX) to suspend trade and investment concessions, as well as obligations related to intellectual property rights, in response to unilateral policies or practices by countries or economic blocs that negatively affect the international competitiveness of Brazilian products.

 

The bill also aims to shield Brazil from what Senator Tereza Cristina described as “disguised protectionism,” such as the European Union Deforestation Regulation (EUDR), which will come into effect at the end of the year. The European regulation introduces unilateral measures with environmental requirements that go beyond Brazilian legislation.

 

The bill establishes criteria for CAMEX’s intervention in response to three types of actions by other countries: “Those that interfere with Brazil’s legitimate and sovereign choices through threats or the application of trade and investment measures; those that violate or undermine benefits granted to Brazil under any trade agreement; and those that impose unilateral measures based on environmental requirements that are more stringent than the environmental protection standards, rules, and parameters adopted by Brazil”—a clear reference to the EUDR.

 

The proposal also authorizes CAMEX’s Strategic Council (CEC) to adopt countermeasures, such as restricting imports of certain products or suspending concessions, either separately or cumulatively. The text indicates that these countermeasures should be “proportional to the economic impact” caused to Brazil by the initial actions of the targeted countries.

 

Another provision requires the Ministry of Foreign Affairs to conduct diplomatic consultations to “mitigate or nullify the effects of the measures and countermeasures.” CAMEX will also be responsible for establishing mechanisms to periodically monitor the effects of the adopted countermeasures and the progress of negotiations.

 

Despite the tariff dispute with the U.S. government, Senator Tereza Cristina argued during the CAE session that the bill does not encourage tariff retaliation and was drafted to apply to all countries, without targeting specific nations or blocs such as the United States or the European Union. “This bill is not a retaliation. It is a protection when Brazilian products are retaliated against,” the senator emphasized when casting her vote.

 

The CAE president, Renan Calheiros (Brazilian Democratic Movement), also rejected the idea that the approval of the bill constituted an attack on the U.S. but defended the tools it provides to the federal government. “It is undoubtedly a legitimate response to the American tariff hike,” Mr. Calheiros said. “We are equipping Brazilian legislation with reciprocity mechanisms. If the government chooses to adopt reciprocity measures, it will no longer lack the legal framework to do so.”

 

As previously reported by Valor, the senator’s bill aims to protect all Brazilian goods and products—not just agribusiness—in both economic and environmental terms. The proposal stresses the need for a “clear reaction” by the government and the adoption of a “credible mechanism” to fight barriers and protectionism.

 

The inclusion of room for negotiation was a new element introduced in Senator Tereza Cristina’s report and differed from the original text authored by Senator Zequinha Marinho (We Can Party). The initial proposal included the concept of environmental reciprocity and sought to create barriers for products from countries with lower environmental protection standards than Brazil’s.

 

Source: Valor International

https://valorinternational.globo.com

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04/04/2025

 

U.S. tariff hike could ease Brazil’s inflation outlook for 2025

Economists see inflation closer to 5% than 5.5%; Treasury yields fall

 

The sweeping global tariffs announced on Wednesday (2) by U.S. President Donald Trump—on what he dubbed “Liberation Day”—may create downward pressure on Brazil’s inflation outlook for this year. Economists now see inflation numbers hovering around 5%, rather than above 5.5%. The median projection in the Central Bank’s Focus survey currently points to an IPCA official inflation rate of 5.65% in 2025 and 4.5% in 2026.

 

Inflation expectations embedded in NTN-B bonds (Brazilian Treasury notes indexed to the IPCA) due in May 2025 fell to 5.64% on Thursday, from 5.96% the day before, 6.48% five days ago, and 9.83% a month ago, according to Warren Rena. For NTN-Bs maturing in August 2026, implied inflation fell to 4.95%, down from 5.27%, 5.42%, and 6.26% over the same periods.

 

Market sees lower interest rates ahead on U.S. risk, trade tensions

 

Despite the downward bias, projections remain above the upper limit of the inflation target, set at 4.5%. Brazil was less affected by the newly announced tariffs, as its products will face a 10% surcharge—the minimum rate imposed by the Trump administration.

 

If the situation remains as it is, the measure could result in higher inflation in the U.S., slower growth there, and a broader global economic slowdown, said Andréa Angelo, chief inflation strategist at Warren. These effects, she noted, could weaken the U.S. dollar, easing inflationary pressure on goods in Brazil.

 

Ms. Angelo pointed out that when the real strengthens against the dollar, the pass-through to consumer prices tends to be smaller than when the Brazilian currency depreciates. Still, an exchange rate of R$5.50 to the dollar, for example, could reduce Brazil’s goods inflation and lead to a 0.27 percentage point drop in the IPCA, bringing the projection to 5.2%. On Thursday, the dollar’s exchange rate closed at R$5.62. “There’s also the possibility that Asia will face a glut of goods, since it won’t be exporting as much to the U.S.,” she added.

 

Inflation risks

 

Mirella Hirakawa, head of research at Buysidebrazil, said that inflation risks for 2025, which had been tilted to the upside, now appear more evenly balanced. The consultancy had already projected a lower inflation rate for 2025 than the market consensus, with a year-end IPCA of 5.2%. Last week, the forecast was revised upward to 5.4%, and the 2026 projection increased from 4.4% to 4.6%.

 

“I think that for 2025, we and the market will likely meet halfway—somewhere between 5.4% and 5.5%. But for 2026, the projections shouldn’t change much,” Ms. Hirakawa said. She noted that the estimates do not yet factor in the impact of private payroll-deductible credit in 2025 or the income tax reform scheduled for 2026.

 

She said Thursday’s drop in Brazil’s exchange and interest rate markets reflects the relatively limited impact of the U.S. tariffs on Brazil, combined with a higher risk of recession in the U.S. than of global price pressure. “But we’re talking about a potential new world order, with a high degree of uncertainty around the new map of trade agreements.”

 

She sees two possible scenarios: one where all countries reduce tariffs and economies become more open—including the U.S.; and another where nations retaliate against the U.S. and forge new trade deals among themselves, with the U.S. left out.

 

“In my view, regardless of the scenario, the U.S. will feel the inflationary effects before any hard data on activity. Initially, uncertainty will play a larger role in the slowdown, but the most significant impact would come in the second half of the year, possibly reinforcing fears of a recession—which could become a self-fulfilling prophecy,” she said.

 

The Trump administration’s tariff hike could trigger responses from other trade partners, potentially sparking a trade war that would hurt the global economy. Still, Brazil stands to lose less than other countries, said Iana Ferrão, economist at BTG Pactual. The extent of that loss, however, will depend on how much the global economy deteriorates, she noted.

 

‘Impoverishment Day’

 

Sergio Vale, chief economist at MB Associados, called “Liberation Day” an “Impoverishment Day,” saying it would “shackle the American population to much higher prices.” For Brazil, he said, the announcement strengthened the country’s growing alignment with China and bolstered commodity trade chains. The relatively mild tariff rate imposed on Brazil helped strengthen the real through expectations of an improved trade balance, he added.

 

“The idea of a stronger trade balance with China and other countries, combined with accelerated progress on trade deals with Europe, for example, should help keep the exchange rate lower in the coming months. As a result, the real is likely to remain around R$5.70 throughout 2025,” Mr. Vale said.

 

This stronger exchange rate supports MB’s IPCA estimate of 5.1% for 2025 and helps push inflation away—for now—from levels above 5.5%, he said. “Still, both this year and next, when we expect 4.5%, inflation is likely to end President Lula’s term near the upper limit of the target range.”

 

The combination of a stronger real, moderate global slowdown risk, and a possible increase in oil supply in May, as announced by OPEC+, led Banco Pine to lower its 2025 IPCA forecast from 5.25% to 5.1%. “Given our outlook for the domestic and global economy, we feel relatively comfortable with this projection,” said Cristiano Oliveira, head of economic research.

 

XP expects some recovery in commodity prices and the U.S. Dollar Index (DXY) in the coming weeks, despite the high level of uncertainty. It also does not anticipate a near-term interest rate cut from the Federal Reserve. As a result, XP maintained its exchange rate forecast at R$6 to the dollar at the end of 2025 and R$6.20 in 2026. Still, the brokerage acknowledged that the probability of stronger Latin American currencies—beneficial for inflation and monetary policy—has increased.

 

XP also lowered its 2024 goods inflation forecast from 4.7% to 4.3%, driven by first-quarter currency gains. However, it now assumes a yellow flag for electricity tariffs in December, with an additional surcharge. This kept its 2025 IPCA forecast at 6%. For 2026, the forecast rose from 4.5% to 4.7% due to the expected impact of income tax reform.

 

Source: Valor International

https://valorinternational.globo.com

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04/04/2025

 

RETAILERS BRACE FOR FALLOUT FROM U.S. TARIFFS ON CHINESE GOODS

Industry fears an influx of low-cost imports and pressure on local jobs and production as Chinese sellers seek new markets

 

Brazilian retailers and consumer goods manufacturers are expressing concerns about the potential impact of the U.S. government’s recent decision to impose higher tariffs on certain Chinese products, according to industry representatives. As of May 2, items shipped from China and Hong Kong to the United States that cost up to $800—previously exempt from import duties—will now be taxed at a 30% rate.

 

There is growing apprehension that some of these goods, which are often cheaper than those produced locally, could be redirected to Brazil. Industry leaders also fear that the Chinese government might increase export subsidies to support businesses hit by the new U.S. tariffs—measures that could further distort global trade.

 

The Brazilian Textile and Apparel Industry Association (ABIT) warned of a potential “avalanche of Asian imports,” which could overwhelm domestic producers in what has been dubbed the “blouse war”—a metaphor for the fierce competition between foreign and local brands in Brazil’s retail market originated from the flood of cheap clothes from China.

 

As Asian products become more expensive for U.S. buyers, online marketplaces and merchants selling through those platforms may look for alternative markets to offset revenue losses. They could also attempt to absorb part of the new 30% duty, potentially with government backing from Beijing.

 

According to Jorge Gonçalves Filho, president of the Retail Development Institute (IDV), foreign companies selling in Brazil already pay a combined 44.6% in taxes, factoring in import duties and the standard 17% state-level sales tax (ICMS). In states where ICMS reaches 20%, the total tax burden rises to about 50%. For domestic retailers, the effective tax rate can be as high as 80% to 100%, depending on the sector.

 

“They [Asian companies] pay half of what we do,” Mr. Gonçalves said. “That imbalance makes the country more vulnerable to imports. It’s only natural they would look for alternatives after Trump’s tariffs. This could harm us, and we’re waiting to gather data to assess the impact,” he added. “If countries with more protectionist policies begin subsidizing prices here in Brazil, we’ll quickly feel the consequences, especially in terms of job losses.”

 

Mr. Gonçalves cited data from Brazil’s General Register of Employed and Unemployed Persons (CAGED), which shows an uptick in retail job creation since August, when the country began taxing shipments under $50 at a rate of 20%, ending the previous tax exemption.

 

Although many of these platforms depend on consumer demand, some produce and sell their brands. They often use subsidies to boost sales—such as covering part of the taxes paid by customers—or adopting aggressive pricing strategies in certain countries through incentives offered to third-party sellers.

 

These e-commerce websites have the autonomy to define their pricing and tax strategies on a country-by-country basis. In 2023, Shein partially covered ICMS taxes for buyers in Brazil.

 

According to two sources familiar with the lobbying efforts of Chinese platforms in Brasília, foreign marketplaces have been developing contingency plans since the beginning of the year. Until the announcement by former U.S. President Donald Trump earlier this week, the expected tariff increase was 10%, not 30%—a rate that could also be applied as a flat $25 per item, rising to $50 after June 1.

 

While more mature markets such as Japan and the United Kingdom—both with lower import duties—are natural targets for redirected shipments, Brazil’s significance as a fast-growing consumer market means that some of the redirected goods are likely to land there too, according to industry insiders.

 

On social media, ABIT president Fernando Pimentel warned that several major exporters of textiles and garments to the U.S. are likely to be severely impacted by the new American tariffs. Even with the new duties, taxes in the U.S. remain lower than in Brazil.

 

“We don’t yet know how they’ll respond to this tax tsunami,” Mr. Pimentel wrote on LinkedIn. “But given how vital these exports are to their economies, they will seek new markets—and here lies the danger: that Brazil becomes a prime destination, putting pressure on local production, investment, and employment.”

 

He called for immediate “legitimate trade defense measures” to avoid being overwhelmed by a flood of low-cost Asian imports. “We were already actively working on this front, and now we must double down,” he said.

 

The largest Asian consumer goods platforms operating in Brazil include Shopee, Temu, Shein, and AliExpress.

 

Shein declined to answer questions about potential impacts in Brazil and said it would respond via AMOBITEC, a trade group representing mobility and technology companies. AMOBITEC said that it is too early to evaluate the consequences of the U.S. decision, and emphasized that Brazil’s high taxes—among the highest in the world—remain a barrier to large-scale market shifts.

 

“We cannot lose sight of the fact that taxes on purchases in Brazil remain the highest globally,” the group said, noting that the announcement alone is unlikely to significantly alter current trade flows.

 

AliExpress, Shopee, and Temu did not respond to requests for comment.

 

According to the director of a textile manufacturer in Minas Gerais state, Brazil could soon face a “torrent” of Chinese imports due to the U.S. tariff changes.

 

When asked whether Brazil’s relatively closed economy might shield it from such a wave, he said that even with the 20% import tax and ICMS, Asian platforms continue to grow rapidly in Brazil—often outpacing domestic retailers—making the country an attractive alternative.

 

To illustrate the scale of the potential impact, the U.S. Customs and Border Protection processes over 4 million shipments of up to $800 per day. In Brazil, the Federal Revenue Service reported about 187 million international parcels in 2024 so far—an average of 520,000 per day.

 

Source: Valor International

https://valorinternational.globo.com

 

 

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04/07/2025

 

BRAZIL CONCERNED BY THREAT TO MULTILATERAL TRADE SYSTEM

Despite lower U.S. tariffs, Lula administration warns of global risks

 

Members of the Lula administration say there is no reason to celebrate Brazil’s inclusion in the lowest tariff tier under the sweeping measures announced last Wednesday (2) by U.S. President Donald Trump. While Brazil secured a “comparative advantage” with lower rates, officials warn the move could signal a breakdown of the multilateral trade system, with unpredictable and potentially harmful consequences for all countries.

 

This concern is shared by sources at the Planalto Palace and the Foreign Ministry, including Celso Amorim, special advisor to President Lula.

 

Mr. Amorim said that weeks of talks between Brazilian diplomats and representatives of the Office of the United States Trade Representative (USTR) helped secure Brazil a place among the few countries facing a 10% tariff—alongside Argentina, the United Kingdom, Australia, Singapore, Chile, and Colombia—nations with which the U.S. runs a trade surplus. By comparison, the new tariffs are 20% for the European Union, 24% for Japan, 25% for South Korea, and 32% for Indonesia.

 

“The Foreign Ministry did an excellent job of clarifying that the U.S. has a consistent surplus with Brazil,” Mr. Amorim told Valor. “It’s much better to start bilateral negotiations from that position than from one where the situation could be much worse [with higher tariffs]. I just don’t think we should be thanking the U.S. This is incompatible with the multilateral system. There’s nothing to celebrate.”

 

Defending the multilateral system, Mr. Amorim cited Brazil’s past victories, such as the 2014 resolution of the cotton dispute with the U.S. at the World Trade Organization (WTO), and the country’s success in overriding patents for HIV treatment drugs in the 1990s, backed by international bodies.

 

The full impact of the U.S. tariff package is still being assessed by the Brazilian government and business associations. At the presidential palace, officials believe this will be a long-term effort, as the final assessment depends on developments such as retaliatory measures from other countries and broader effects on global trade.

 

On Thursday (3), President Lula said Brazil would take “all appropriate measures to defend our companies and Brazilian workers.”

 

He said Brazil’s response would be guided by WTO rules and the reciprocity law passed by Congress on the same day as the U.S. tariff announcement.

 

One source said the Reciprocity Bill puts “all cards on the table” for Brazil. However, any retaliatory move will take time. For now, the focus is on negotiation.

 

Next week, a new round of talks will be held by Ambassador Mauricio Lyrio, the Foreign Ministry’s secretary for Economic and Financial Affairs, with the USTR. Officials in Brasília believe the negotiations could take months or even years. Brazil has already requested a return to tariff-free quotas for its steel exports to the U.S.—a demand that remains on the table.

 

The government is also coordinating with the private sector through industry groups like the National Confederation of Industry (CNI), the National Confederation of Agriculture (CNA), and the Brazil Steel Institute.

 

Milei’s U.S. tariff pledge

 

While Brazil continues to advocate for multilateralism, the current trade context could push the country to impose additional tariffs to prevent a flood of Chinese and other Asian goods—a scenario also being considered in the European Union.

 

There is growing concern in Brasília over the future of Mercosur. During a visit to the U.S. on Friday, Argentine President Javier Milei said he would align Argentina’s tariffs with a U.S. basket of 50 products.

 

This poses a challenge, as Mercosur is based on a Common External Tariff (CET) and joint trade negotiations with outside partners. If Mr. Milei follows through—something few expect—it could spell the end of the South American bloc, or at least Argentina’s exit from it.

 

Next Wednesday, President Lula will travel to Honduras for the summit of the Community of Latin American and Caribbean States (CELAC). Gisela Padovan, the Foreign Ministry’s secretary for Latin America and the Caribbean, said Thursday that while the U.S. tariff hike is not officially on the agenda, it may be mentioned in the summit’s final declaration.

 

Other sources expect the declaration to include a general “defense of multilateralism.” The issue may also be raised during Mr. Lula’s bilateral meetings with other leaders, which have yet to be confirmed.

 

Source: Valor International

https://valorinternational.globo.com

 

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04/07/2025

 

OPEC+ OUTPUT BOOST ERODES COMPETITIVENESS OF BRAZILIAN OIL

If prices remain low, country will earn less from top export while Petrobras gets room to lower fuel prices

 

The decision by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to increase oil production starting in May by a larger-than-expected volume has surprised the market, worrying oil companies and adding further uncertainty to an already challenging global short- and medium-term outlook.

 

The cartel’s announcement came on April 3, a day after President Donald Trump’s announcement of broad tariffs on the rest of the world. Analysts and industry executives believe the combination of these two factors has heightened uncertainties. The American trade tariffs are expected to slow down the global economy, which could reduce growth in countries and decrease demand for oil. Yet, despite this already complex scenario, OPEC+ opted to triple the volume of additional supply compared to the previous plan for 2024, causing oil prices to plummet.

 

On Friday (4), global benchmark Brent crude closed at $64.95 per barrel, a drop of 6.44% from the previous day and 10.73% for the week.

 

A scenario with lower Brent prices could help Petrobras in reducing diesel and gasoline prices in the domestic market. On April 1st, the company cut diesel prices by R$0.17 per liter, a decrease of 4.6%. It was the first time the oil company reduced fuel prices since December 2023. Gasoline, which saw an increase in July 2024, remains unchanged.

 

However, if the Brent price reduction persists in the long run, Brazil is likely to earn less from oil exports. In 2024, oil was Brazil’s main export item, surpassing soybeans, with sales of $44.9 billion, a 5.23% increase over 2023.

 

Daniel Osorio, head of energy for Hedgepoint in the U.S. and Latin America, states that Brazil is in a difficult position: “The increase in production by OPEC members could make it more challenging for Petrobras and other Brazilian players to compete in Europe and Asia.”

 

On Thursday, OPEC+, which accounts for about 40% of global oil production, decided to raise the commodity’s supply by 411,000 barrels per day starting next month. This volume equates to three months of the supply ramp-up plan announced in December. At that time, the idea was to add 140,000 barrels per day to the cartel’s production from April 2025, including May and June. Until then, it could be said that this week’s supply announcement was anticipated since the end of last year. But what surprised many was the addition of a significantly larger number of barrels all at once.

 

Given the circumstances, Goldman Sachs revised its oil price estimate to $66 per barrel by the end of 2025, a reduction of $5 per barrel from the previous forecast. According to the bank, in addition to the cartel’s decision, the tariffs announced by Donald Trump also increase the risk, which is expected to bring more volatility through the end of the year.

 

Mr. Osorio from Hedgepoint says that the OPEC+ announcement is related to the group’s internal policies. “Although the timing might seem strange, it’s important to consider that Russia has been expressing concerns about Kazakhstan’s production growth for some time, especially after the expansion of the massive Tengiz oil field operated by Chevron. The decision reflects ongoing regional tensions rather than a direct response to Trump’s tariffs,” he states.

 

The Hedgepoint analyst evaluates that while it was expected for OPEC+ to resume production levels in 2025, this decision combined with Mr. Trump’s tariffs could have uncertain effects: “What is certain is that many countries will be forced to negotiate with the United States. Companies are already seeking ways to mitigate the effects of these new tariffs.” The drop in oil prices, he adds, could lead oil producers to reduce supply levels in more expensive fields, prompting oil companies to reevaluate investment plans.

 

Citi describes the combination of American tariffs and OPEC’s decision as a “double whammy” for the oil and gas sector, increasing risks to global economic growth and demand for the commodity. In a report, the bank states that OPEC’s choice to triple the production increase compared to previous expectations accelerated the oil price decline: “The group of producers’ policy change appears to stem from a period of tensions over certain members exceeding production limits.”

 

Felipe Perez, an analyst at S&P, says that despite the uncertainties brought by OPEC there is a notion that Trump’s tariffs are short-lived and negotiating tools that might be used in discussions with Saudi Arabia, an OPEC+ member: “OPEC faces challenges in bringing consensus among members. If the price drop trend continues, the American producer will consider production plans and counter with the American campaign for more drilling, ‘drill, baby, drill.’” For Mr. Perez, a lower price could help OPEC+ rein in some members who, due to high foreign private capital in production, were exceeding quotas.

 

Source: Valor International

https://valorinternational.globo.com

 

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04/08/2025

 

ORANGE JUICE INDUSTRY FACES $100M BLOW FROM NEW U.S. TARIFF

CitrusBr says cost to Brazilian exporters could rise 80%

 

The tariff hike announced by U.S. President Donald Trump is expected to cost Brazilian orange juice exporters more than half a billion reais. According to CitrusBR, which represents exporters Cutrale, Citrosuco, and Louis Dreyfus, the new 10% tariff on the commodity could add $100 million per year in taxes for Brazilian companies.

 

The additional tariff, unveiled last week, targets a range of Brazilian products.

 

CitrusBR’s estimate assumes Brazil will export around 235,500 tonnes of orange juice to the U.S. during the 2024/25 harvest season. The U.S. currently accounts for 37% of Brazil’s total orange juice exports.

 

Data from the Foreign Trade Secretariat (SECEX), compiled by CitrusBR, show that between July 2024 and February 2025, Brazil shipped 207,200 tonnes of frozen concentrated orange juice (FCOJ 66 Brix) to the U.S., generating $879.8 million in revenue.

 

The new tariff would be in addition to existing charges, including a $415-per-tonne duty on FCOJ at 66 Brix concentration. That charge alone amounted to $85.9 million in 2024, according to CitrusBR.

 

Taken together, the existing and new tariffs could push the total annual tax burden on Brazil’s orange juice exports to about $200 million, or roughly R$1.1 billion.

 

“This 10% tariff leads to an over 80% increase in costs. We’re jumping from $415 per tonne to nearly $800, while Mexico—our main competitor in the U.S. market—pays zero thanks to its free trade agreement with the U.S.,” said Ibiapaba Netto, CitrusBR’s executive director, in an interview with Valor.

 

Despite the headwinds, CitrusBR said that “Brazilian companies continue, individually and in line with their commercial strategies, to supply the U.S. market with high-quality orange juice.”

 

“The industry regrets, however, that the decision was made without taking into account the long-standing complementary relationship between Brazilian production and Florida’s processing industry, as well as long-term partnerships with U.S. bottling companies,” Mr. Netto added.

 

Last year, the U.S. was the destination for 32.12% of Brazil’s orange juice exports.

 

Source: Valor International

https://valorinternational.globo.com

 

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04/10/2025

 

SANTOS-GUARUJÁ TUNNEL AUCTION DRAWS INTEREST FROM FOUR GROUPS

Construction cost and port disruption top list of investor worries

 

The auction for the Santos-Guarujá tunnel concession is scheduled for August, but private-sector players are already gearing up for what is considered an exceptionally complex project. According to sources familiar with the matter, at least four business groups are actively studying the bid: China’s CCCC, partnered with Portugal’s Mota-Engil; Spain’s Acciona; Italy’s WeBuild, teaming up with Brazilian companies Andrade Gutierrez; and OEC (Odebrecht Engenharia e Construção), which is finalizing a joint venture with Queiroz Galvão’s EGTC and a third, as-yet-undisclosed firm expected to provide the financial backing for the consortium.

 

Odebrecht has reportedly held talks with several asset managers and international companies—including WeBuild and Chinese groups—in a bid to secure a financially viable partnership. One source indicated that with the addition of the third investor, now in advanced negotiations, the consortium’s financial structure would be in place. The company is also said to have hired an international firm specialized in tunnel design, given that the construction method being proposed has never before been used in Brazil.

 

Acciona has already partnered with Ballast Nedam, a Dutch firm specializing in submerged tunnel construction. Sources say the Spanish group has been studying the project for over a year and has held biweekly meetings with government officials. Talks were reportedly held with Vinci to potentially form a consortium, but the French firm ultimately walked away. Observers note, however, that Vinci remains interested in the auction, though its immediate focus is on other large-scale mobility projects in São Paulo that require substantial capital investment.

 

Acciona told Valor that it is “constantly assessing opportunities” and sees “significant value in Brazilian infrastructure assets.” CCCC, Odebrecht, EGTC, and Andrade Gutierrez declined to comment. Mota-Engil, WeBuild, and Ballast Nedam had not responded by press time.

 

The auction is widely seen in the market as highly challenging. The construction will require significant investment, involve an engineering method unprecedented in Brazil, and may interfere with operations at the country’s largest port. On the other hand, the fact that both the São Paulo state government and the federal government are contributing funds and sharing key risks is viewed as a strong point for the project’s feasibility, according to industry sources.

 

One major red flag cited by analysts is the project’s estimated rate of return, which some say is based on outdated interest rate assumptions. Given the complexity and risk of the initiative, they argue that a revised rate reflecting current financial conditions is needed.

 

There are also doubts surrounding the capital expenditure estimates. The project’s preliminary studies put CapEx at R$5.8 billion, but sources say the figure may be significantly underestimated due to incomplete technical details in certain areas of the project, which introduce uncertainty. The final construction cost, they warn, could be considerably higher.

 

Analysts are also concerned about potential impacts on shipping traffic. “The challenge is to execute a project of this scale without disrupting ongoing port operations,” said Casemiro Tércio Carvalho, a partner at infrastructure consultancy 4 Infra. “It’s a logistical challenge both for the port authority and for the contractor.”

 

Civil engineer and infrastructure consultant Jennyfer Tsai flagged further complications related to the staging areas where tunnel segments—which are to be built off-site and then submerged—will be constructed.

 

The auction notice identifies four possible locations within the Port of Santos for this activity, but Ms. Tsai noted that all of them overlap with areas designated for future terminal projects by the port authority, raising doubts over land availability. “If none of these sites can be used, that will drive up costs,” she warned.

 

In a statement, the Santos Port Authority (APS) said it is working to ensure “that any proposed location aligns with current port planning and is compatible with strategic projects underway,” while adding that the final site selection will be the concessionaire’s responsibility.

 

Regarding concerns about shipping operations, APS said that the tunnel is “urgently needed and will be built with the highest level of responsibility, with any necessary navigation suspensions planned well in advance in coordination with terminal operators.”

 

São Paulo’s Department of Investment Partnerships emphasized that the tunnel project was designed to minimize disruption to port activity. “Navigation through the main channel is expected to be suspended for only two days per module—six modules are currently planned, though that number could be reduced,” the agency stated. It also defended the current return and CapEx parameters, saying they were “based on robust studies.”

 

Despite lingering concerns, analysts and insiders acknowledged that several major risks—such as demand uncertainty, expropriation challenges, and geotechnical issues—have been adequately addressed. “From a regulatory standpoint, I don’t see any deal-breakers. The risk matrix already accounts for key issues,” Mr. Carvalho said.

 

The auction is set for August 1. The contract will be awarded to the bidder offering the highest discount on annual payments, which are capped at R$304 million. If the maximum discount (100%) is reached, bidders may then offer a discount on the public subsidy, which can go up to R$4.96 billion.

 

Source: Valor International

https://valorinternational.globo.com

______________________________________

04/10/2025

 

CARBON MARKET CREATES NEW JOB OPPORTUNITIES IN BRAZIL

Companies seek professionals for emission reduction projects, clean energy adoption, and credit negotiations

 

 

A new “green” industry is gaining momentum in Brazil and beginning to recruit professionals for strategic roles. The regulated carbon market—which allows companies and countries to offset greenhouse gas (GHG) emissions by purchasing credits tied to environmental initiatives—was established by a government bill at the end of 2024 and is expected to be fully operational by 2030.

 

According to the International Chamber of Commerce (ICC Brazil), the sector could attract up to $120 billion in investment over the next five years, potentially generating 3.4 million jobs by 2040.

 

Professionals in this segment, which has been active in other countries for more than two decades, are recruited to lead projects aimed at reducing GHG emissions, such as the adoption of clean energy and reforestation efforts. They may also calculate an organization’s carbon footprint, advise leadership on sustainable practices, and facilitate carbon credit negotiations between companies.

 

“In the last two years, we’ve seen an 18% increase in the number of projects recruiting for this area,” says Kleber Bonancio, senior associate manager at Talenses, an executive search firm that has specialized in carbon market hires for six years. “The number reflects growing interest in the topic in Brazil, especially after progress on regulated market discussions and projections of sector contributions.”

 

Mr. Bonancio notes that the positive outlook is heating up the job market and prompting more companies to form dedicated teams. “Hiring is happening mainly in the energy sector—both renewables and oil and gas—along with agribusiness, chemicals, and manufacturing,” he explains. However, as the market is still emerging, companies will likely face difficulties filling roles due to a shortage of qualified candidates. “That’s making the talent search extremely competitive and demanding CVs with strong technical skills,” he says.

 

This is the case of Maria Belen Losada, head of carbon products at Itaú Unibanco, who joined the bank in 2022. With more than two decades of experience in the treasury departments of global institutions such as BNP Paribas and Morgan Stanley, the São Paulo-based Argentine executive has spent the last three years immersed in the carbon market. She was recruited by Itaú’s HR team to take on the role. “My responsibilities include advising on carbon project generation, credit commercialization, and market advocacy,” says Ms. Losada, who holds a degree in economics and a specialization in sustainable finance from the University of Cambridge.

 

Among her notable achievements is the creation of a carbon credit trading and custody platform developed in partnership with eight international banks, including BNP, UBS, and BBVA. “The goal is to connect credit supply and demand across the banks’ client bases,” she explains.

 

Leading a team of four, Ms. Losada believes the sector in Brazil urgently needs more professionals. “The new accounting and reporting obligations for publicly traded companies, along with the growing need to plan for climate-related risks, will require specialized talent,” she says. “We’ll need professionals skilled in greenhouse gas emissions measurement, climate transition consulting, environmental and international law, and data science.”

 

At Bichara Advogados, partner Patrícia Mendanha Dias—who holds a master’s degree in environmental engineering—has worked with carbon-related cases for about a decade. “My legal practice has always focused on environmental matters, and I transitioned to the climate agenda because of its growing relevance and increasing client demand,” she explains.

 

Ms. Dias provides legal counsel on environmental issues and assists companies in structuring credit transactions, reviewing contracts, and monitoring sector-specific legislation.

 

With a team of five employees dedicated exclusively to carbon projects, she’s currently involved in initiatives in northern Brazil that bring together investors and riverside communities. “To do this work well, you need to be ready for constant change,” she says. “The sector’s regulations and project viability criteria are continually evolving. In this field, the ability to offer well-directed, proactive guidance is essential.”

 

Soraya Dias Pires, head of decarbonization at the Brazilian environmental solutions multinational Ambipar, emphasizes the need for both technical expertise and a strategic mindset. “In addition to being able to connect sustainability, economic viability, and business development,” says the agronomist, who was recruited by a headhunter in 2022.

 

Her background in innovation and deep understanding of the low-carbon economy helped open the door to the sector, says the executive, who previously served as business development manager at BP Bunge Bioenergia, in the sugar and ethanol industry. “I worked on structuring projects with both environmental and financial impact, linking environmental regeneration with a sustainable economy,” she explains.

 

Reporting directly to CEO Tércio Borlenghi Jr., Pires leads a 70-person team and oversees the certification and sale of carbon credits, the development of corporate decarbonization plans, and the application of geotechnologies for project monitoring. “Our mission is to make decarbonization accessible to companies by securing funding sources that make implementation feasible,” says Ms. Pires, who works on environmental conservation and restoration projects in states such as Amapá, Pará, and Rondônia. “What drives me is knowing that my work contributes to the global climate agenda and creates a legacy for future generations.”

 

Source: Valor International

https://valorinternational.globo.com

______________________________________

04/15/2025

 

BRAZIL HAS TIGHT IMPORT RULES FOR ONLINE AND TRAVEL PURCHASES

Recent law ended exemption for international e-commerce under $50; all imports now subject to tax, with few exceptions

 

Consumers who purchase products from international websites or bring goods from overseas travel are subject to paying Brazil’s Import Tax, a federal levy overseen by the Federal Revenue Service.

 

One of the agency’s stated goals is to protect the domestic market. In one of its tax education guides, the Federal Revenue Service noted that “by collecting import and export taxes, as other countries do, Customs protects the national industry, preserving jobs and our economy.”

 

How does the import tax work?

 

Any individual or business that brings or imports foreign goods for personal use or resale must pay fees associated with what’s known as “customs clearance”—the process of inspection and legalization of goods upon arrival in Brazil.

 

According to tax attorney Renata Bilhim, of law firm Toledo Advogados e Associados, both individuals and businesses are required to pay the Import Tax and the state-level Goods and Services Circulation Tax (ICMS), whose rates vary by state, during the clearance process.

 

The Import Tax rate ranges from 20% to 60% of the product’s final price.

 

In the case of businesses, other federal charges also apply, including:

 

PIS (Social Integration Program);

Cofins (Contribution for the Financing of Social Security);

AFRMM (Additional Freight Charge for the Renewal of the Merchant Marine), a levy on ocean freight and import operations.

 

Ms. Bilhim noted that travelers arriving by air or sea who bring personal-use goods or items within the $1,000 exemption limit are not required to pay taxes. The exemption for land border crossings is $500.

 

Travelers selected for inspection by the Federal Revenue Service with goods exceeding the exemption limits must either:

 

1. a) pay a 50% tax on the total value of the excess goods upon arrival;
2. b) or have the goods seized for later auction or donation.

 

Exemptions

 

The Federal Revenue Service lists several categories of items exempt from import taxes. These include:

 

Medicines imported by individuals for personal use, up to $10,000, for human treatment (cosmetics, supplements, and veterinary drugs do not qualify);

Commercially valueless samples, such as single shoes or miniatures;

Books, newspapers, and magazines;

Brazilian phonograms and videograms;

Goods replaced under warranty due to flaws;

Imports by diplomatic missions, consular offices, or international organizations.

 

Until August 2024, international online purchases up to $50 were exempt from taxes. However, Federal Law No. 14902/2024 removed this exemption—now, all foreign purchases are subject to tax, regardless of value.

 

Importing companies or their legal representatives must file the Single Import Declaration (DUIMP)—which replaces the former Simplified Import Declaration (DSI) and Import Declaration (DI).

 

This unified electronic document must be submitted via the Siscomex Website, the federal government’s platform that consolidates customs, tax, and commercial information from both importers and exporters.

 

The measure is part of Brazil’s New Import Process (NPI), a federal initiative aimed at streamlining and reducing the bureaucracy involved in bringing goods into the country.

 

Source: Valor International

https://valorinternational.globo.com

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04/15/2025

 

BE8’S PROFIT SOARS NEARLY 30-FOLD IN 2024

Brazil’s top biodiesel producer expands with new plants and investment in SAF, ethanol, and low-carbon fuel

 

Be8 ended 2024 with a net profit of R$477 million—nearly 30 times higher than the previous year—and a recovery in sales.

 

The company has been aggressively expanding its operations in biodiesel, where it is Brazil’s largest producer, while also diversifying its portfolio with investments in sustainable aviation fuel (SAF), advanced biodiesel, and ethanol.

 

Net revenue from sales reached R$7.3 billion, a slight increase of 1.4% compared to 2023, though still below the record R$9.6 billion posted in 2022. Adjusted EBITDA doubled to R$599 million.

 

Last year, Be8 produced more than 900 million liters of biodiesel at its plants in Marialva (Paraná) and Passo Fundo (Rio Grande do Sul), and finalized the purchase of three additional biodiesel plants in the states of Mato Grosso, Piauí, and Pará. The deal was approved by Brazil’s antitrust agency CADE in January 2025.

 

The company is also advancing three greenfield projects. One is the construction of a free trade zone in Paraguay, where a SAF and hydrotreated vegetable oil (HVO) plant will be built—a project first announced in 2019. The second is an ethanol and wheat gluten facility currently under construction in Passo Fundo. The third is a new plant for producing BeVant, its proprietary low-carbon biodiesel, located next to its existing facility in the same city.

 

To support these investments, Be8 issued R$200 million in Agribusiness Receivables Certificates (CRA) last year. According to its financial statements, the company’s net debt rose 18.7% to R$541 million, while net cash fell R$544 million, closing the year at R$493 million.

 

Source: Valor International

https://valorinternational.globo.com

 

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04/17/2025

 

URUS BEGINS FULL-SCALE OPERATIONS IN BRAZIL

Already active in the country through its subsidiaries Alta Genetics, Genex, Transov, and Vas, the American company now plans to bring all other bovine genetics firms in its portfolio to Brazil

 

Already active in Brazil through subsidiaries Alta Genetics, Genex, Transova, and Vas, U.S.-based Urus has announced it will begin full-scale operations in the country starting in June. With the expansion, the company will introduce all other bovine genetics businesses in its global portfolio to the Brazilian market, bringing the group’s total operations in the country to eleven.

 

“This study has been underway for the past two years, with the companies entering individually. Now, they’ll be integrated, and we’ll undoubtedly offer a much stronger solution to the market,” said Heverardo Carvalho, current director of Alta Brasil.

 

As of June, Mr. Carvalho will step into the role of director of Urus, while Tiago Carrara, currently Alta’s market manager, will assume leadership of Alta Brasil. “Our goal is to work together more efficiently to deliver more consistent results for our clients,” said Mr. Carrara.

 

With the expanded presence of its parent company, Alta expects to grow 15% in 2025, compared to 8% in 2024. Genex, meanwhile, is forecasting 17% growth this year, up from 15% in 2023.

 

The group does not disclose revenue figures but reports that Alta and Genex currently account for roughly 45% of Brazil’s bovine genetics market.

 

“We anticipate double-digit growth over the next two to three years, capitalizing on the upward cycle in cattle breeding,” said Sergio Saud, Genex’s sales leader.

 

To support the arrival of additional brands, the group will invest R$10 million in a new distribution center in Uberaba (MG). Among the new additions to the Brazilian market will be Genetics Australia—acquired by the group last year—which specializes in tropical livestock.

 

Other brands in the portfolio include PEAK, a global leader in bull production for genetics centers; SCCL, which converts bovine colostrum into biological products for calf health; and Jetstream Genetics, known for premium Holstein and Jersey dairy cattle.

 

“Expanding our portfolio will become a much stronger reality from now on, and that’s exactly why we’ll need a more robust structure,” said Mr. Carvalho.

 

Source: Valor International

https://valorinternational.globo.com

______________________________________

04/23/2025

 

BRAZIL AND CHINA SEE SHARED STRATEGY IN ENERGY TRANSITION

U.S. retreat from climate commitments boosts Brazil and China leadership ahead of COP30

 

Energy transition, particularly the challenges of expanding renewable energy, took center stage at the third panel of the Summit Valor Econômico Brazil-China 2025, held Wednesday in Shanghai. Brazilian Minister of Mines and Energy Alexandre Silveira stressed the need for multilateralism to confront the climate crisis. “COP30 will be an opportunity to link sustainability to social development and highlight the economic value of natural assets like renewable energy and biodiversity,” he said.

 

Liu Dehua, executive director of the China-Brazil Energy Center at Tsinghua University, noted that with the United States backing away from climate commitments, Brazil and China have emerged as the most important players in the global climate agenda. “We now have many opportunities for mutual cooperation,” he said, pointing to the role Brazilian biomass could play in China’s plan to reach net-zero carbon emissions by 2060.

 

Jorge Arbache, professor of economics at the University of Brasília and a consultant to the Climate and Society Institute, said Brazil is well positioned to contribute to a global low-carbon economy and emphasized its alignment with China in the energy transition. “Beyond natural capital and abundant resources, Brazil is attractive to investors because of its low geopolitical risk,” he said.

 

Panelists also highlighted the potential for technology transfer in Brazil-China cooperation. Victor Zhang, chief energy expert at Huawei Digital Power, said Brazil’s Northeast region has vast wind and solar potential, but its ultra-high voltage transmission networks require dynamic adjustments to maintain voltage stability. “That’s why we’ve developed competitive smart grid solutions and can transfer this technology to support Brazil’s sustainable energy transition,” he said.

 

Sun Tao, chairman of State Grid Brazil Holding, recalled that the company has been operating in Brazil since 2010 and continues to invest in the country, applying ultra-high voltage transmission technology. “We are closely following the development of renewable energy and the challenge of transmitting this energy from major production hubs in the Northeast to consumption centers in the Southeast,” he said.

 

Li Yinsheng, president of China Three Gorges International, acknowledged Brazil’s extensive hydroelectric infrastructure but cautioned that climate variability and capacity limits make it necessary to expand installed generation capacity—especially in light of Brazil’s reindustrialization plans. “Hydropower can be part of the solution, but we are also conducting research to develop alternative energy sources in Brazil,” he said.

 

Li Sisheng, vice president of Power China International, said Brazil’s competitive edge in renewable energy could position it as a destination for tech-related investment, particularly in data centers designed for artificial intelligence. “AI development is extremely energy-intensive, and Brazil has abundant supply from wind, solar, biomass, and green hydrogen,” he noted.

 

The summit is organized by Editora Globo and Valor Econômico in partnership with the Brazilian Center for International Relations (Cebri) and Caixin Global; with main sponsorship from BRF and Marfrig; sponsorship from Cedae, ApexBrasil, the Ministry of Development, Industry, Trade and Services, the Rio de Janeiro City Hall, CNA/Senar, BYD, and Huawei; and support from Eletromidia, Vale, CNI, the São Paulo State Government, Ports of Paraná, Suzano, São Paulo City Hall, and FIESP.

 

Source: Valor International

https://valorinternational.globo.com

______________________________________

 

04/25/2025

 

APRIL INFLATION HINTS AT SLIGHT SLOWDOWN

Leading indicator IPCA-15 falls to 0.43% in April from 0.64% in March even as price increases became more widespread

 

 

The Extended Consumer Price Index -15 (IPCA-15)–considered a preview of Brazil’s official inflation rate–rose 0.43% in April, following a 0.64% increase in March, the Brazilian Institute of Geography and Statistics (IBGE) reported on Friday (25).

 

This was the highest rate for the month of April since 2023, when it was 0.57%. In April 2024, the IPCA-15 had increased by 0.21%.

 

The result exceeded the median of 32 projections from analysts at consulting and financial institutions surveyed by Valor Data, who had estimated a 0.42% increase in April. The range of estimates varied from an increase of 0.37% to 0.54%.

 

With the April data, the IPCA-15 registered a 5.49% increase over 12 months. As of March, the 12-month result was 5.26%. The cumulative IPCA-15 for 2025, up to April, was 2.43%.

 

The 12-month result was above the median of the 32 estimates collected by Valor Data, which was 5.48%, with a range between 5.43% and 5.6%. The inflation target set by the Central Bank for 2024 is 3%, with a tolerance of 1.5 percentage points above or below.

 

Of the nine price categories used to calculate the IPCA-15, five saw an acceleration in increases from March to April. Higher rates were observed in food and beverages (to 1.14% from 1.09%); household goods (to 0.37% from 0.03%); clothing (to 0.76% from 0.28%); health and personal care (to 0.96% from 0.35%); and communication (to 0.52% from 0.32%).

 

Conversely, there was a slowdown in the rate of increase in housing (to 0.09% from 0.37%); personal expenses (to 0.53% from 0.81%); and education (to 0.06% from 0.07%). Transportation reversed direction (to -0.44% from 0.92%).

 

The IPCA-15 is a preview of the IPCA, which is calculated based on a typical consumption basket for families with incomes between one and 40 minimum wages. The indicator covers nine metropolitan regions (Rio de Janeiro, Porto Alegre, Belo Horizonte, Recife, São Paulo, Belém, Fortaleza, Salvador, and Curitiba), in addition to the cities of Brasília and Goiânia. The difference from the IPCA lies in the collection period and geographic coverage.

 

Inflation became more widespread among the items comprising the IPCA-15 in April. The Diffusion Index, which measures the proportion of goods and services that experienced price increases in a given period, rose from 61% in March to 67.8% a month later, according to calculations by Valor Data considering all items in the basket.

 

Excluding food, one of the more volatile groups, the indicator also rose to 67.8% from 60%.

 

Source: Valor International

https://valorinternational.globo.com

 

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04/25/2025

 

TRADE SHIFTS POSE BIGGER RISK THAN TARIFFS, ANALYSTS SAY

Recession fears loom larger for companies than tariff hikes, emerging consensus shows

 

More than the proposed 10% additional tariffs on Brazilian imports to the U.S., investment analysts are increasingly concerned about the broader shift in global trade dynamics that could result from an escalating U.S.–China trade war.

 

There is consensus among analysts at banks and brokerages that Brazilian companies with more globalized operations are better positioned to cushion the impact of any new trade barriers. However, continued uncertainty surrounding U.S. policy—driven by erratic decisions and reversals—makes it difficult to clearly separate potential winners from losers.

 

Embraer remains somewhat shielded thanks to its “near-monopoly” in the U.S. regional jet market, analysts say.

 

The case of Iochpe-Maxion, a Brazilian auto parts manufacturer, illustrates the challenges in assessing risks. Earlier this month, J.P. Morgan had identified the company as one of the sector’s most exposed to the proposed tariffs. But that assessment came before news reports suggested that U.S. President Donald Trump was considering exemptions for vehicle and parts imports to allow companies more time to establish local manufacturing operations.

 

Should such exemptions materialize, there is room for a positive impact if Iochpe avoids direct tariffs, according to UBS BB. The same would apply to Tupy, another listed Brazilian auto parts supplier.

 

Brazilian firms would be indirectly affected by tariffs imposed on light vehicles exported to the U.S. that contain parts manufactured in Mexico, where both companies operate. Mexico is facing additional tariffs of 25%. In a worst-case scenario, with no exemptions, J.P. Morgan estimates up to a 6% revenue hit for both firms. The bank also reiterated that the potential drop in demand triggered by tariffs poses another layer of risk.

 

XP analysts echoed that concern, emphasizing how higher prices could dampen volumes or squeeze supply chains by distributing added costs downstream.

 

The Financial Times recently reported that Trump may exempt Chinese auto parts from tariffs following pressure from industry executives, while maintaining existing tariffs on imports from other countries.

 

In the pulp and paper sector, XP does not foresee significant changes in volume, given the limited U.S. production of short-fiber pulp, which depends heavily on Brazilian exports. However, analysts at U.S. bank Truist, citing Dow Jones Newswires, warned that the new tariffs could suppress demand from American buyers. While the industry is known for its resilience during downturns, the sweeping tariff hikes could become the tipping point that deepens a broader economic slowdown, weakening demand for paper and packaging.

 

In Brazil, the impact on Suzano is expected to be minimal, given the company’s relatively low exposure to the U.S. market, XP noted. However, the recent drop in pulp prices in China is likely to weigh on results for exporters, according to Bank of America.

 

Embraer, with global operations that include factories in Portugal and the U.S., maintains a strong market position in regional jets but is not immune to macroeconomic threats, Citi analysts warn. A recession would likely curb demand for both commercial and executive aircraft, and the company still faces risks tied to higher and more aggressive tariffs.

 

WEG, often viewed by analysts as one of the companies least exposed to trade disruptions, remains on XP’s watchlist due to the cyclical nature of its commodity-linked product portfolio. About 8% of its revenue comes from exports to the U.S.

 

“As long as the domestic U.S. outlook remains uncertain, we see room for WEG to expand local production by ramping up capacity at its Marathon facilities, reducing reliance on other regions if needed,” the brokerage noted. WEG acquired Marathon in 2023; the U.S.-based company has operations across several countries.

 

In the steel sector, Gerdau is seen as a likely beneficiary thanks to its substantial U.S. footprint, although it remains vulnerable to a potential recession. XP estimates that around 50% of Gerdau’s EBITDA comes from its North American operations. “If tariffs are indeed raised to those levels, it’s good news for local producers, including Gerdau’s U.S. unit,” Itaú BBA commented. According to the bank, every 5% increase in Gerdau’s average selling price in the U.S. adds 12% to its EBITDA. The bank also pointed to data from American steelmaker Nucor, which estimated that only 18% of imported steel volumes into the U.S. would be subject to the new 25% tariff. Since Mr. Trump’s election in November last year, shares of Gerdau and other U.S. steelmakers have gained more than 15%, XP noted.

 

However, multinational companies such as Ternium and ArcelorMittal are expected to be among the hardest hit if the 25% tariff on steel and aluminum imports is enacted.

 

So far, the U.S. president has not announced additional tariffs on steel and aluminum, which have been subject to a 25% duty since the first Trump administration. Still, Brazilian mining giants like Vale and CSN Mineração could be affected if the trade conflict increases uncertainty around Chinese exports, driving down iron ore prices—the core business for both companies.eyond the additional 10% tariffs on Brazilian imports to the United States, investment analysts are more concerned about the new trade conditions likely to arise from a trade war between the U.S. and China.

 

Experts from banks and brokerages agree that Brazilian companies with more global operations will be better positioned to mitigate the effects of these changes.

 

However, there’s still a lot of uncertainty about the direction of U.S. policy, with frequent shifts in government decisions, making it more complex for analysts to clearly identify winners and losers.

 

The case of Iochpe-Maxion exemplifies this difficulty. The automotive parts and components manufacturer was flagged by J.P. Morgan in early April as one of the sector’s companies most affected by the tariffs. However, this analysis was made before the possibility of exemptions for vehicles and parts imported by the U.S. emerged.

 

According to recent reports, U.S. President Donald Trump might be considering possible exemptions to give companies in the sector more time to establish factories in the U.S.

 

If this happens, there could be positive impacts if Iochpe remains exempt from direct tariffs, according to UBS BB. This also applies to Tupy, another publicly traded auto parts manufacturer.

 

Brazilian companies would be indirectly affected by tariffs on light vehicles exported to the U.S. that contain parts manufactured in Mexico, a country where they have operations and which faces additional 25% tariffs. In the worst-case scenario, without an exemption, J.P. Morgan estimated up to a 6% impact on the revenues of both companies. Additionally, the bank reiterates the potential effect of reduced demand caused by the tariffs.

 

This is the same concern for analysts at XP, who highlight the potential price increases that could negatively influence volumes or pressure the supply chain by distributing additional costs.

 

The British newspaper “Financial Times” reported that Trump might be planning to exempt auto parts imported from China, following intense pressure from industry executives, without, however, altering the tariffs established for other countries.

 

In the paper and pulp sector, XP does not anticipate significant changes in volumes due to the low production of short-fiber pulp in the U.S., which relies on Brazilian exports. However, analysts at the American bank Truist believe that tariffs may result in lower demand from American companies, according to Dow Jones Newswires. Although the sector has shown resilience during tough times, the tariff hikes could be the decisive factor leading to a broader recession, with weaker demand for paper and packaging.

 

In Brazil, the impacts are limited for Suzano, considering its relatively low exposure to the U.S., says XP. The decline in pulp prices traded in China is expected to negatively influence the results of commodity exporters, explains Bank of America.

 

Embraer, with its global operations, continues to defend its “quasi-monopoly” position in the U.S. regional jet market, according to XP. In addition to Brazil, the company has factories in Portugal and the U.S. However, it is still not shielded from the recession threat, believes Citi: an economic slowdown would reduce the momentum for Embraer’s executive and commercial jet orders, as well as pose risks of higher and more aggressive tariffs.

 

The case also applies to WEG – identified by analysts as one of those with limited impacts – which still worries XP, considering the cyclical nature of the company’s portfolio, exposed to commodities. Approximately 8% of the company’s revenue comes from exports to the U.S.

 

“While the domestic scenario in the U.S. remains uncertain, we see room for WEG to expand its local production by accelerating capacity utilization at Marathon facilities, reducing reliance on other regions if this proves beneficial,” says the brokerage. Marathon, acquired by WEG in 2023, has operations in various countries, including the U.S.

 

In the steel industry, Gerdau is seen as a beneficiary due to its operations in the U.S., but it remains exposed to a recession. About 50% of the company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) comes from its North American division, calculates XP. “If tariffs indeed increase at these levels, it’s positive news for local producers, including [the American operation of] Gerdau,” opines Itaú BBA. For every 5% increase in the average selling price of Gerdau in the U.S., the company’s EBITDA rises by 12%, according to the bank, which refers to data from the American steel company Nucor, which would have only 18% of steel volumes imported to the U.S. subject to the tariff increase to 25%. Since Trump’s election in November last year, Gerdau and U.S. steel companies’ shares have risen by more than 15%, XP notes.

 

However, multinational companies Ternium and ArcelorMittal are expected to be the most adversely affected by the implementation of 25% tariffs on steel and aluminum imports.

 

It’s worth noting that–for now–the U.S. president has not imposed any additional tariffs on steel and aluminum, which have already faced 25% tariffs on exports to the U.S. since the first Trump administration. However, Vale and CSN Mineração could be impacted as the tariff war heightens risks associated with Chinese exports, which would reduce iron ore prices – the main product of these Brazilian companies.

 

Source: Valor International

https://valorinternational.globo.com

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04/28/2025

 

CHINESE INVESTORS RENEW INTEREST IN BRAZILIAN ASSETS

Infrastructure and mining sectors attract new wave of Chinese investment

 

Chinese investors have returned to Brazil’s mergers and acquisitions scene after a few years of cooling interest in the country’s assets. Investment bankers say the focus remains largely on infrastructure—including logistics, energy, and mining—but interest is also emerging in technology, particularly in data infrastructure.

 

Recent deals involving Chinese buyers include the sale of Vast Infraestrutura, part of Prumo Logística, to China Merchants (CMP). Chinese wind blade manufacturer Sinoma Blade also came close to acquiring Brazilian wind turbine maker Aeris, which is currently navigating a financial crisis.

 

Late last year, China Nonferrous Metal Mining Co. (CNMC) purchased the tin, niobium, and uranium operations of Peruvian miner Taboca in Amazonas for $340 million. A source noted that a Chinese bidder was also actively involved in the sale of Vale’s energy assets under the Aliança brand.

 

Specialists believe Chinese investors are now also eyeing Brazil’s data infrastructure, including data centers, driven by the global race to expand capacity amid growing demand fueled by artificial intelligence. Brazil’s availability of land and clean energy has become a key attraction. Critical minerals and renewable energy assets are also expected to be major targets, with a focus on the energy transition.

 

Bankers say the ongoing trade war between the United States and China could further boost Chinese interest in Brazil.

 

“Chinese players are involved in the processes,” said Roderick Greenlees, global head of investment banking at Itaú BBA. He added that foreign presence in Brazil’s M&A market has increased this year, and that China’s renewed focus on international markets stems partly from tightened U.S. relations. “Latin America has returned as an alternative,” he said.

 

The new wave of interest, however, predates the latest tensions. Fabio Mourão, head of corporate clients at BNP Paribas in Brazil, said Chinese interest in traditional sectors like infrastructure has been growing for the past 18 to 24 months, well before the current escalation of U.S.-China trade tensions. “A new front has opened with Chinese investors actively seeking data center opportunities in Brazil,” Mr. Mourão noted.

 

Trade war impact

 

Anderson Brito, head of investment banking at UBS BB, recalled that Chinese names were more prevalent in Brazilian M&A between 2009 and 2015, with a decline afterward. Now, he said, there are signs of renewed appetite. Since 2018, when the U.S.-China trade war began, Chinese investment in the U.S. has slowed, pushing investors to explore other regions. “We have several new mandates involving Chinese interest, particularly in mining, infrastructure, and financial services,” he said.

 

Antonio Coutinho, head of M&A at Citi in Brazil, confirmed greater Chinese participation, especially in mining and infrastructure deals. “It’s not yet a Chinese boom, but there is a moderate uptick in interest,” he said. Mr. Coutinho noted that some newcomers—firms with no previous presence in Brazil—are also entering the market.

 

The appetite is likely to grow. Túlio Cariello, director of content and research at the Brazil-China Business Council, said that while China focused its investments on the U.S. and Europe in the 2000s, it has shifted toward other markets amid mounting restrictions. He expects that rising tensions with the U.S. will further accelerate this trend. One of Brazil’s main advantages, Mr. Cariello pointed out, is the size of its consumer market. Investments could come through both M&A deals and greenfield projects, he added.

 

Li Yong Hong, CEO and partner at Yafela Investimento, a Chinese firm specializing in foreign trade and M&A, believes Chinese interest in Brazil will continue to grow, although the first effects will likely be felt in trade before materializing into new investments. He said joint ventures are likely to be a favored route, helping to bridge cultural differences. In Brazil, Yafela has partnered with Volt, and the companies expect to close their first deal soon, said Volt’s founding partner Henrique Faria.

 

Interest from China has not been limited to asset purchases. Celso Nishihara, director of M&A at Banco Fator, said significant Chinese interest has emerged over the past two years, not only in M&A but also in direct investments. In addition to energy and mining, Chinese investors are also targeting the automotive sector, with Chinese automakers GWM and BYD ramping up local production in Brazil.

 

Source: Valor International

https://valorinternational.globo.com

 

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04/30/2025

 

FISCAL SIDE AND PRODUCTIVITY CHALLENGE BRAZILIAN GROWTH

Valor Econômico debates future of country and hindsights with special edition celebrating its 25-year anniversary

 

Brazil grew close to 3% or more in the last four years, a considerable pace, but one the country is unable to sustain. Fiscal woes and nearly stagnated productivity, decades-long problems in the country, are holding back the economy from sustaining stronger growth.

 

“The government is by far the biggest debtor, generating a demand that pressures interest rates and creates a vicious cycle which needs to be stopped,” sums up former Central Bank president Armínio Fraga, currently a principal at Gávea Investimentos. “We are unable to create an efficient state, with resource allocations that justify to society the tax burden’s size,” says former Brazilian Development Bank (BNDES) president Elena Landau.

 

In order to improve the fiscal side, analysts underscore the importance of enacting measures to control spending, which include decoupling pensions and welfare benefits from the minimum wage, as well as enacting a new pension reform.

 

A productivity that grows too slowly, except with agribusiness, represents another problem. Between 1995 and 2024, labor efficiency gains rose on average just 0.8% a year, according to FGV Ibre researcher Fernando Veloso. Given the weak efficiency gains, the economy is unable to grow faster without creating inflationary pressure.

Fiscal uncertainties and low productivity are some of the topics discussed in this edition of Valor Econômico, which celebrates its 25-year anniversary with a 96-page special section. Among other challenges discussed are education problems, energy transition, and corporate efforts.

 

“Since early on, the paper set itself out to exercise a prominent role for national development,” says Grupo Globo CEO João Roberto Marinho. “Valor helps promote the debate needed for enhancing public policy and contributes to improving Brazil’s business environment,” he adds. “We don’t have interests, we have values. And such credibility, built among so many temptations, is the pillar of everything,” says Frederic Kachar, generatl director of Editora Globo and Sistema Globo de Rádio.

 

Source: Valor International

https://valorinternational.globo.com

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