Brazil- U.S. trade grows to new record

After the record of Brazil-United States bilateral trade in 2021, the expectation of the American Chamber of Commerce (Amcham Brasil) was for lower growth in 2022, but the surprisingly positive data from the first quarter affirmed the view that, despite the uncertainties, new records can be achieved this year.

Between January and March 2022, the two-way trade reached $19 billion, up 40.2% year over year and the highest value for a first quarter since the records began, in 1989.

“We expected the bilateral trade to continue to grow in 2022, but at a relatively lower level, because the uncertainties are considerable, due to global inflation, the pandemic, the potential slowdown in China and geopolitical and climatic events that affect the world economy. But the first-quarter results were strong,” said Abrão Árabe Neto, executive vice-president of Amcham Brasil.

The most positive aspect, according to him, is that there was growth both in exports from Brazil to the U.S. and in Brazilian imports from the North American country. “On both counts, we saw, for the first quarter, the best values ever.”

Brazilian exports to the U.S. grew 35.9% year over year in the first three months of 2022, to $7.6 billion. The Brazilian purchases from the U.S. totaled $11.4 billion, up 43.2%.

On the export side, the growth was widespread, seen in nine of the 10 main products. In absolute terms, the biggest contribution was from crude oil as sales, which represent more than 10% of total exports to the U.S., grew by almost 167% in the period. The gain was partly due to higher prices (48.5%), but mainly by the increase in volumes (79.5%), Mr. Árabe Neto said. Semifinished products of iron and steel still dominate with a share of almost 14%, but saw a smaller growth in the first quarter, of 4.4%.

Another highlight is the export of beef, which still accounts for only 3% of Brazilian sales to the U.S., but saw growth of 725.5% in the first quarter. As a result, Brazil was the main supplier of the product to the U.S., ahead of Canada, Mexico and Australia, Amcham said.

“There was an interruption in 2017, when sanitary issues arose and the U.S. market closed. In 2020, it was reopened, and it had already been growing at the end of last year,” Mr. Árabe Neto said. “Our production capacity in this industry is very high, and so is our competitiveness. We are very well positioned, and we start to see this good news shaping in the bilateral trade.”

As for the imports of U.S. products in Brazil, the growth was also widespread, with gains in eight of the 10 main items. Some broader factors that contributed to last year’s record persist, such as the purchase of natural gas to feed thermoelectric plants, which grew 263.9% in the first quarter of 2022, totaling $2.1 billion. In this case, growth has more to do with the increase in prices (232.5%) than with the higher volume imported (9.4%).

Even though Brazil’s national grid operator ONS has already signaled that electricity bills will be cheaper this year, suggesting that it will not be necessary to turn thermoelectric plants on as much as last year, Amcham’s view is that the demand for natural gas from the U.S. will remain heated in the first half of the year. “We may see a slowdown in the second half. But if there is a reduction in volume, values could potentially remain high,” Mr. Árabe Neto said.

The Brazilian demand for other energy products from the U.S. – such as fuel oils, crude oil and coal – remained high at the beginning of 2022. And Mr. Árabe Neto also highlighted the growth of more than 90% in purchases of fertilizers as a result of difficulties to buy agricultural inputs from Russia because of the war in Ukraine.

Amcham rejected the notion that the conflict in Eastern Europe can be a commercial opportunity for the Brazil-U.S. relationship because the net consequences for the global economy and world trade are negative, Mr. Árabe Neto said. But he acknowledged that the energy (oil, gas, coal), steel and agricultural inputs industries could see more trade, either by the price factor or by the higher volume.

Source: Valor International

https://valorinternational.globo.com