Petrobras expected to post higher Q1 profit on stronger output

Analysts from BTG, UBS BB, and Ativa project net income of R$34.9bn from revenue of R$130bn

 

 

05/09/2025

Higher oil and gas production in the first quarter is expected to drive a year-on-year increase in Petrobras’s earnings, according to estimates gathered by Valor from three banks and brokerages. On average, analysts forecast a net profit of R$34.9 billion, net revenue of R$130 billion, and EBITDA of R$64.3 billion. If confirmed, those figures would represent increases of 47.25% in profit, 10.47% in revenue, and 7.16% in EBITDA compared to the same period last year.

The projections reviewed by Valor come from Ativa Investimentos, BTG Pactual, and UBS BB. Forecasts for net income ranged from R$24.7 billion (Ativa) to R$41.3 billion (BTG), while revenue projections spanned from R$121.2 billion (Ativa) to R$137.3 billion (BTG). EBITDA estimates ranged from R$60.7 billion (Ativa) to R$67.2 billion (BTG).

In the first quarter, the state-controlled oil company reported production of 2.77 million barrels of oil equivalent per day, up 5.4% from the first quarter of 2024.

BTG Pactual analysts Luiz Carvalho, Pedro Soares, and Henrique Pérez noted that, following the market’s negative reaction in the fourth quarter—mainly due to higher capital expenditures—investors remain focused on how spending is evolving. Rising capex, they cautioned, could limit future dividend payouts.

According to BTG, lower investment levels combined with higher production should be key to a recovery in Petrobras’s share price. The analysts also said the company is likely to benefit from better refining margins and lower operating costs due to improved efficiency and fewer maintenance shutdowns.

A separate report from UBS BB, authored by Matheus Enfeldt, Tasso Vasconcellos, and Victor Modanese, emphasized that “the big question for the quarter is capex.” The report noted that the key issue is how capital spending will influence dividend expectations, and flagged a particular risk in Q1 results due to the rollover effect of investments made in the fourth quarter of 2024.

Santander analysts Rodrigo Almeida and Eduardo Muniz said they expect EBITDA growth to be driven by higher output, lower lifting costs, and stronger refining margins. However, they foresee weaker results in the gas and power segment, primarily due to a $283 million charge tied to a legal settlement with EIG Energy. In March, Petrobras agreed to pay $283 million—without admitting fault—to settle a lawsuit filed by the U.S. firm, which claimed losses linked to its investment in the FIP Sondas fund managed by Sete Brasil. Sete Brasil filed for bankruptcy after Petrobras canceled contracts for exploration rigs.

Santander’s estimates, provided in U.S. dollars, project first-quarter net income of $5.393 billion, up 12% from a year earlier. The bank expects net revenue of $20.621 billion and adjusted EBITDA of $11.359 billion—down 13% and 9%, respectively, compared to the first quarter of 2024.

*By Rafael Rosas, Valor — Rio de Janeiro
Source: Valor International
https://valorinternational.globo.com
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Embraer eyes Chinese market as order backlog hits record high

Brazilian planemaker sees opportunity amid global supply constraints, trade tensions

05/07/2025

Global turbulence caused by U.S. President Donald Trump’s trade policies and ongoing supply chain issues in the aviation sector have opened new opportunities for Brazilian aircraft manufacturer Embraer, particularly in Asia, according to the company’s CEO, Francisco Gomes Neto.

Mr. Gomes told Valor that rising global demand for aircraft could bring the company’s commercial jet deliveries close to 100 units by 2026—levels last seen before a wave of industry crises.

Embraer posted R$6.4 billion in revenue in the first quarter, the highest since 2016 and a 44% increase year over year. Net income reached R$434 million, up 204.1%. The company’s backlog currently stands at $26.4 billion, the largest in its history.

Shares rose 0.8% on Tuesday (6) to R$66.46, bringing the 12-month gain to 93%, according to Valor Data.

Asia has emerged as a key region for Embraer’s expansion, particularly China—the world’s second-largest aviation market behind the U.S. “We see huge potential for the E2 [Embraer’s new-generation jet], which fits right between Comac’s models,” Mr. Gomes said, referring to the Chinese state-owned competitor. “Comac wants to protect its market, but we are working directly with customers.”

To strengthen its presence in China, Embraer recently hired Patrick Peng, a former Airbus and GE executive, to lead business development efforts in the region.

While Comac offers aircraft with seating for either 80 or over 160 passengers, Embraer’s jets range from 110 to 146 seats. The company already operates a fleet of around 90 aircraft in China, mainly ERJ-145s and E190s.

Meanwhile, Boeing—Embraer’s American rival—has taken a direct hit from the U.S.-China trade dispute, with President Xi Jinping’s government halting deliveries of Boeing aircraft to Chinese buyers. The decision, affecting roughly a quarter of Boeing’s production, triggered a sharp drop in the company’s stock. Boeing executives have since broken protocol by publicly confirming they are seeking alternative buyers for those jets.

Mr. Gomes emphasized that Embraer’s presence in Asia predates recent trade conflicts. This year, the company marks 25 years of operations in China. Beyond China, Embraer delivered its first E195-E2 jet in April to Mongolia’s Hunnu Air, which ordered two aircraft for routes to Beijing—a move Mr. Gomes says will help showcase the model within China.

“Embraer is also in dialogue with governments. China mainly imports commodities from Brazil and exports electric vehicles and mobile phone components. We’ll be part of a Brazilian trade mission to China this May,” the CEO said.

He noted that persistent supply chain disruptions continue to delay deliveries of larger aircraft, with lead times exceeding five years in some cases for models from Boeing and France’s Airbus. This bottleneck, combined with soaring demand for air travel, is pushing airlines to explore alternatives to wide-body jets.

Embraer gained attention last year when American Airlines signed a deal to purchase up to 133 E175 jets, a contract valued at over $7 billion. Meanwhile, Boeing continues to grapple with the fallout from repeated issues with its flagship 737 Max model.

Despite a favorable demand environment, Embraer is not immune to global economic headwinds. The company recently warned investors that a 10% U.S. tariff on Brazilian imports could reduce its EBIT margin by as much as 0.9 percentage points this year.

The executive jet segment—where components are shipped from Brazil to the U.S. for final assembly—will bear the brunt of the impact. The company is implementing cost-cutting and efficiency measures to offset the tariff burden.

Nevertheless, Embraer maintained its 2025 delivery forecast: 145 to 155 jets in the executive segment, and 77 to 85 jets in the commercial segment.

While next year’s targets have yet to be released, Mr. Gomes said he sees room to deliver between 90 and 100 commercial jets in 2026, with the potential to surpass that level in 2027. The company last hit that volume in 2017, before the pandemic and the collapse of its proposed commercial aviation joint venture with Boeing—a dispute resolved only in 2024 through arbitration, which awarded Embraer $150 million in compensation.

Looking ahead, the CEO expressed optimism about securing a defense contract with India for the KC-390 military transport aircraft. Embraer is also seeking to expand the model’s presence in the U.S. The company recently participated in U.S.-based trade shows and concluded a market strategy project with consulting firm Oliver Wyman.

*By Cristian Favaro — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Petrobras CEO piles on pressure for Equatorial Margin drilling

“Let’s drill, baby” statement in Houston comes amid push from officials and regional lawmakers for environmental license

 

 

 

 

05/07/2025

Petrobras President Magda Chambriard on Tuesday (6) enthusiastically defended exploratory drilling in the Amazon River mouth, part of an oil province known as Equatorial Margin,

Ms. Chambriard is in the U.S. attending the Offshore Technology Conference (OTC), a global industry event held in Houston. Valor obtained access to the video of her remarks. When contacted, the company confirmed the authenticity of the footage.

Standing alongside Amapá Governor Clécio Luís (Solidarity Party), Ms. Chambriard defended the project, which is under fire from environmentalists, arguing that the possibility of extracting oil in the region represents a major opportunity for the state and for the country.

“I celebrate the presence of Governor Clécio because he represents the opportunity we have in the Equatorial Margin and in the state of Amapá, where we truly believe we will have good surprises once we obtain the license to drill,” she said during a panel hosted by the Brazilian Petroleum and Gas Institute (IBP) at the event. Ms. Chambriard then added in English: “Let’s drill, baby!”

Beside the governor, Ms. Chambriard emphasized the importance of discussing the potential for a new oil reserve in the country at what “the world’s largest oil exploration and production conference.” She also assured that the drilling will be done safely and poses no risk to the population.

“The people of Amapá can rest assured that Petrobras operates responsibly, employing the highest technology for the benefit of the Brazilian population and Amapá society,” Ms. Chambriard said.

Along the same lines, Governor Luís thanked the invitation to join the Petrobras CEO at the conference and highlighted the potential economic impact of the exploration for the state.

“It’s very important to say that for us in Amapá, this is a turning point for our economy. We really want and really need the resources that would come from this oil. And we believe we can do this in a very safe way,” the governor declared.

The statement comes amid pressure from government officials and lawmakers from the North region for the Brazilian Institute for the Environment and Renewable Natural Resources (Ibama) to grant the environmental license for the exploration.

The main supporter of the proposal in Brasília is Senate President Davi Alcolumbre (Brazil Union of Amapá). Mr. Alcolumbre, a close ally of Governor Luís, even secured support from President Luiz Inácio Lula da Silva, who went so far as to say that Ibama “can’t keep up this stalling,” in a clear message opposing the stance of Environment Minister Marina Silva.

The minister maintains that the agency’s decision is technical. Ibama argues that the Amazonas River mouth region is environmentally sensitive, requiring strict licensing procedures.

In March, Ibama issued a technical opinion approving Petrobras’s plan for cleaning the drillship designated for exploration in the Equatorial Margin. The approval is a step that brings the company closer to securing the environmental license for exploratory activity in the region.

Besides Amapá, the Equatorial Margin includes ares offshore of the states of Pará, Maranhão, Piauí, Ceará, and Rio Grande do Norte.

*By Caetano Tonet — Brasília

Source: Valor International

https://valorinternational.globo.com

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Informal employment in Brazil hits lowest rate since pandemic

Economists see trend continuing despite expected slowdown

 

 

 

05/07/2025

With the exception of 2020—when the onset of the pandemic triggered a wave of layoffs that hit informal workers hardest—the share of informal workers in Brazil fell to its lowest level in the historical series of the Continuous National Household Sample Survey (PNAD Contínua) in the first quarter. A strong start to 2025 in formal job creation has led economists to revise their projections and suggests that informality may continue to shrink in the coming months, even with an anticipated economic cooling in the second quarter.

In the first quarter, the unemployment rate measured by PNAD rose to 7% from 6.6% in the fourth quarter of 2024. However, seasonally adjusted, the rate dropped 0.1 percentage point to 6.5%. Informal workers accounted for less than 38% of the labor force—excluding the pandemic period, this was the lowest level on record. At the time, the preservation of more formal jobs skewed statistics, with informality dipping to 36.5% in the second quarter of 2020 and average real income peaking, a level only surpassed last year. The share of informal workers rose again the following year, surpassing 40% in the second quarter of 2021, but fell back below that threshold in the same period of 2022.

In March, the number of informal workers declined for the fifth straight month, based on seasonally adjusted data from LCA 4Intelligence. Meanwhile, formal employment rose for the 16th consecutive month, accelerating recently, fueled by stronger-than-expected job creation. The General Register of Employed and Unemployed (CAGED) recorded a net gain of 71,500 formal jobs in March. While this was below analysts’ expectations, it helped offset February’s surprisingly high figure, when 431,000 jobs were added.

Growth and reforms

Fernando Honorato, chief economist at Bradesco, said the strong formal job market reflects Brazil’s solid economic growth—GDP has expanded by 3% or more for four consecutive years since 2021. “There were major stimulus measures during this period, from both the federal government and subnational entities [states and municipalities], which spurred activity. As unemployment falls, formalization increases, because employers must offer better conditions than informal work to attract workers. This happened in the previous growth cycle and is happening again,” he explained.

Since that last favorable period, a series of reforms, innovations, and developments have transformed the economy and labor market, further supporting this trend, analysts say. “These are hard to separate from GDP growth effects. Joaquim Levy [former finance minister] once said we’d only see the real impact of the labor reform during a strong labor cycle. And the pandemic hit right after the reform,” Mr. Honorato noted.

Passed in 2017, the labor reform reduced the risk of lawsuits after dismissals—cases that often result in financial shocks and cause companies to shut down. As a result, businesses became more willing to hire formally, said Alessandra Ribeiro, head of macroeconomic analysis at consultancy firm Tendências.

Although the number of labor lawsuits rose again in absolute terms, exceeding 2 million in 2024, economist Bruno Imaizumi of LCA 4Intelligence pointed out that, relative to the employed population and the stock of formal workers, the share of lawsuits remains well below pre-reform levels. He believes the reform still gives employers more confidence by lowering legal risks.

“This helps smaller businesses survive and hire more,” he said.

New contracts

Ms. Ribeiro highlighted that the reform also paved the way for new types of formal contracts, such as intermittent and temporary work. “Today, these account for around 11% of formal hires in the CAGED data,” she said. Other developments also contributed to this trend, including credit and capital market reforms that expanded access to financing and indirectly pushed for formalization.

“Companies that go public or issue bonds need to be more formalized, provide more transparency, and minimize risks to be vetted by banks and investors,” she added.

Mr. Honorato said credit reforms have been a major incentive for formalization. “The creation of the TLP [Long-Term Rate], which opened space for corporate debit, and the collateral framework reform are among several changes that boosted capital markets and encouraged companies to formalize in order to benefit.”

Ms. Ribeiro also pointed to improvements in education and technology. Between 2000 and 2022, the share of working-age Brazilians with higher education nearly tripled from 6.8% to 18.4%, Census data shows. Additionally, digital platforms have facilitated job matching. “It’s not just ride-hailing and delivery apps, but all platforms that reduce the cost of connecting employers and job seekers,” she said.

MEI effect

Another factor is the rise of the “individual microentrepreneur” (MEI) model, which employed 6.7 million people in February. Though often viewed as a form of disguised employment—an issue now under legal scrutiny after Supreme Court Justice Gilmar Mendes suspended related cases—MEIs are counted as formal workers in PNAD statistics.

“Some app drivers and couriers are MEIs, as the government wants. It’s complicated, because many value their independence and flexibility. But there are also those who opt in to access the social safety net or credit programs,” said Rodolfo Tobler, an economist at the Brazilian Institute of Economics at Fundação Getulio Vargas (Ibre FGV).

Mr. Imaizumi of LCA believes that formal job growth could continue as long as the economy stays resilient, easing fears of a sharper downturn in 2025. LCA forecasts unemployment will remain stable this year at 6.6%, with 1.4 million formal jobs created—300,000 more than previously estimated. “That’s fewer than in the past three years, but still a significant figure,” he said.

Tendências has also revised its average unemployment forecast for 2025, lowering it from 6.9% to 6.6%. Its estimate for net formal job creation rose from 1 million to 1.5 million.

(Sergio Lamucci contributed reporting.)

*By  Marcelo Osakabe  — São Paulo

https://valorinternational.globo.com/

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MedSênior and Leve Saúde plan minority stake sales

Senior-focused health insurers seek investors to fund expansion

 

 

 

 

 

05/06/2025

Prevent Senior’s network includes 13 hospitals, 4 emergency care units, and 29 clinics, mostly in São Paulo — Foto: Divulgação
Prevent Senior’s network includes 13 hospitals, 4 emergency care units, and 29 clinics, mostly in São Paulo — Photo: Divulgação

Health insurers MedSênior and Leve Saúde, both focused on Brazilians over 60, are in talks with investment funds to sell minority stakes. While both companies have been growing rapidly, they plan to allocate the funds differently.

MedSênior, which already has Singapore’s sovereign fund Temasek as a shareholder since 2022, is considering a secondary offering in which the founding family would reduce its stake but retain control. Leve Saúde, on the other hand, is negotiating a capital raise of between R$300 million and R$500 million to expand its network of clinics and hospitals, Valor has learned.

Most health insurers in Brazil avoid the over-60 population, citing high medical costs, which has led to a shortage of plans for this age group. Currently, 7.7 million Brazilians over 60 have health coverage—15% of the total market—but they account for one-third of all medical expenses, according to consulting firm Arquitetos da Saúde, using data from the national health regulator ANS.

Yet Prevent Senior, MedSênior, and Leve Saúde—Brazil’s three leading senior-focused insurers—are defying that trend. Their loss ratios (medical costs relative to revenue) are well below the industry average, which closed 2023 at 83.8%.

In 2024, MedSênior posted a loss ratio of 56.7%—the lowest in the sector. Leve Saúde was close behind at 56.78%. Prevent Senior, after peaking during the pandemic, ended 2023 with a ratio of 83.1%, which fell to 74.7% in March—closer to historical levels.

Prevent Senior came under fire during the pandemic over allegations ranging from promoting unproven COVID-19 treatments to negligent care. Some cases were dismissed due to lack of evidence, while one investigation by São Paulo’s public prosecutor is still ongoing. No convictions have been issued. “Prevent Senior has always denied any wrongdoing,” the company said.

Over the past two years, a wave of unilateral cancellations by other insurers has driven many new clients to Prevent Senior, disrupting the balance between supply and demand.

Rapid growth

Between 2018 and 2024, MedSênior’s revenue jumped from R$193.8 million to R$2.1 billion. Net income reached R$297 million last year—more than twice that of Prevent Senior, despite the latter generating around R$7 billion in revenue. Leve Saúde, founded in 2020, grew from R$2.3 million in revenue to R$383 million by 2024. The company is still posting losses, due to its smaller scale (81,000 clients) and limited operating history.

Founders Maely Coelho (MedSênior) and Ulisses Silva (Leve Saúde) argue that serving older adults can be profitable. They entered this underdeveloped segment in response to Brazil’s aging population, which is expected to increasingly demand healthcare services. In 2023, 15.6% of Brazilians were aged 65 or older. By 2070, that figure is projected to rise to 37.8%, according to the Brazilian Institute of Geography and Statistics (IBGE).

Together, the three specialized insurers have about 850,000 members, including a small share of younger dependents. Their market share is still limited, considering the 7.7 million Brazilians over 60 with health plans.

Roughly half of those older members have employer-sponsored coverage, often retained after retirement from companies that allow former employees to keep their benefits. However, more employers are eliminating this option—even for retirees willing to pay out of pocket—creating an opening for insurers offering individual plans. These are scarce for all age groups and particularly rare for older adults.

Model focused on prevention

Prevent Senior, MedSênior, and Leve Saúde operate on a prevention-oriented model that emphasizes routine exams and chronic disease management—costs that are far lower than hospital stays or surgeries. In addition, services are offered through proprietary clinics and hospitals designed specifically for elderly care, which is more cost-efficient than outsourced provider networks.

Prevent Senior pioneered this model and remains the market leader, with nearly 600,000 clients—three times more than MedSênior. Its network includes 13 hospitals, 4 emergency care units, and 29 clinics, mostly in São Paulo. This year, the company plans to open two more hospitals, two new urgent care centers, and a clinic.

“Having an operation fully focused on this demographic makes a difference. These companies have deep expertise—their entire infrastructure and data systems are tailored for this audience. Industry data shows people over 60 account for 15% of the member base but 34% of medical costs. Yet these specialized players perform far better,” said Luiz Feitoza, a partner at Arquitetos da Saúde.

Most insurers struggle to maintain a dedicated division for older clients. Not surprisingly, sources say Prevent Senior received acquisition and merger offers from large insurers shortly before the pandemic.

Around the same time, investors were eyeing MedSênior, which ended up selling a 15% stake to Temasek in 2022. The capital raised—undisclosed—went to shareholders. This time, the new offering would again be secondary, and Temasek’s stake would not be diluted, people familiar with the matter said.

The Singaporean sovereign fund did not invest directly into the operation but opened doors for MedSênior’s expansion into new markets.

“We don’t need capital—we generate cash. But we’re a small operator from Espírito Santo, and it’s hard to break into São Paulo, for example. Once we say our partner is Temasek, everything changes. It gives us credibility. Temasek did a thorough due diligence process, which proves everything is in order,” Mr. Coelho said. “They’re a dream partner. They don’t interfere, they know we understand healthcare. They sit on the board and have helped us a lot with introductions,” he added.

MedSênior is now present in São Paulo, Rio de Janeiro, Minas Gerais, the Federal District (Brasília), Paraná, Rio Grande do Sul, and, more recently, Recife.

Founded during the COVID-19 pandemic in 2020, Leve Saúde is also growing rapidly. Sources said its capital raise—between R$300 million and R$500 million—will fund hospital acquisitions in its core market of Rio de Janeiro and expansion to other regions of Brazil. The company currently operates 11 clinics, which serve as patients’ first point of care.

Leve also has clients in small and mid-sized business plans (PME), a segment MedSênior has only recently entered. One of Leve’s strategies is to attract clients from other Rio-based insurers such as Assim Saúde, which is reportedly in talks to be sold, and Golden Cross, which will be shut down by the ANS in mid-May and must transfer its clients to other providers.

MedSênior and Leve Saúde declined to comment on the planned transactions. Prevent Senior also did not comment on past merger and acquisition offers.

*By Beth Koike — São Paulo

Source: Valor International

https://valorinternational.globo.com

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Selic expectations dip slightly, challenging COPOM’s strategy

Focus survey may signal broader revisions to market outlook on monetary tightening

 

 

 

05/06/2025

Analysts are starting to review forecasts, which could translate into a broader shift in the market's outlook
Analysts are starting to review forecasts, which could translate into a broader shift in the market’s outlook — Photo: Freepik

Economists surveyed in the Central Bank’s weekly Focus report now expect interest rates to end the year slightly lower—suggesting both a milder tightening cycle and an earlier start to rate cuts.

According to data released Monday by the Central Bank, the median forecast for the Selic rate at the end of 2025 fell from 15% to 14.75% per year.

While the revision is minor and unlikely to significantly impact the Central Bank’s inflation projections at this week’s monetary policy committee (COPOM) meeting, it could mark the beginning of a broader reassessment of the expected intensity of monetary tightening—a shift that may complicate the committee’s goal of gradually bringing inflation back to its 3% target.

Two main factors drove the lowered Selic projection. First, fewer economists now expect the benchmark rate—currently at 14.25%—to peak at 15% or more during this cycle.

The median forecast points to a 0.5 percentage point hike at this week’s Copom meeting, followed by a smaller 0.25 point increase in June. But a growing number of analysts believe the tightening will end at 14.75%.

This is reflected in the average forecast for the June meeting, which dipped from 15.06% to 14.91%. Broadly, about one-third of analysts now believe the cycle will stop short of the 15% mark. A separate survey by Valor indicates that just under half of respondents expect the Selic to remain below 15%.

A second Central Bank report—tracking the distribution of inflation expectations—also points to fading expectations of a more aggressive rate hike cycle. The share of analysts forecasting rates above 15% in 2025 dropped from 36.7% in March to 16.4% in April.

The second factor weighing on year-end Selic forecasts is a growing belief that rate cuts might begin before the end of the year.

According to the median projection, the Selic would hold steady at 15% through the COPOM meetings in July, September, and November—then fall by 0.25 percentage point in December. This was the main new element in this week’s Focus report.

Market expectations for the year-end Selic are significant because they feed into the Central Bank’s inflation forecasting models. Although the updated forecasts show lower rates than those used in the last Copom meeting, the difference is not dramatic.

Previously, economists expected the Central Bank to begin easing in January 2026, starting with a 0.25 percentage point cut, followed by another of the same size. The Focus survey now anticipates one 0.25-point cut in December, but leaves the pace of easing for 2026 unchanged—still notably cautious.

The Focus distribution map supports this trend. The share of analysts projecting year-end Selic rates of 14.25% or lower rose from 5.7% in February to 9.4% in March and 14.3% in April.

This downward shift in rate expectations doesn’t materially change the outlook for real interest rates, which are expected to remain tight.

The average Selic rate across the eight COPOM meetings in 2026 is projected at 13.31%, compared to an expected inflation rate of 4.51%. For December 2026, the Selic is forecast at 12%, versus an inflation estimate of 4% for 2027.

If inflation expectations remain stable, this implies a real interest rate between 8% and 9% through the end of 2026—a restrictive level consistent with efforts to bring inflation back to target. The neutral real rate is estimated between 5% and 7%, depending on analysts’ outlook.

Since the March meeting, COPOM has emphasized that maintaining a sufficiently tight rate for long enough is just as important as reaching that restrictive level in the first place.

To enforce this stance, the Central Bank will need to counteract the market’s natural tendency to price in early rate cuts.

The Focus survey is starting to reflect that tension, subtly adjusting expectations. While this week’s dip in Selic projections may not shift the broader monetary picture, it could mark the beginning of a trend that—if it gains momentum—may complicate the Central Bank’s efforts to hold the line on inflation.

*By Alex Ribeiro, Valor — São Paulo

Source: Valor Inernational

https://valorinternational.globo.com/

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Trade war also creates opportunities for Brazil

Economists argue that while U.S. protectionism adds volatility to global trade, it also opens doors for some emerging markets

 

 

05/06/2025

The protectionist measures adopted by U.S. President Donald Trump are injecting instability into global trade, but they may also create new business opportunities for Brazil and other emerging markets. That’s the assessment of Maria Silvia Bastos Marques, former president of Brazilian Development Bank (BNDES) and currently Secretary for Major Projects in the state of Rio de Janeiro, and José Márcio Camargo, chief economist at Genial Investimentos.

The two experts spoke on Monday (5) at a business forum hosted by the Rio de Janeiro Commercial Association (ACRJ), where they discussed the shifting global economic landscape under Mr. Trump’s second term in office. Since taking office in January, the U.S. president has imposed tariffs on numerous countries—including key allies such as Canada and Mexico—initiated a trade war with China, and undermined multilateral cooperation.

According to Ms. Marques, one certainty amid the current uncertainty is that “we’re heading into a period of major turbulence and a world quite different from the one we’ve become used to.”

“It feels like we’re living through a reversal of what happened after World War II,” she said. In the postwar era, the U.S. was one of the main proponents of strengthening multilateral ties—an approach now being openly challenged by Mr. Trump.

Ms. Marques views the Trump administration’s trade stance as part of a broader power struggle with China: “There’s a contest between the U.S. and China for global supremacy—over who leads in innovation, who calls the shots, and who holds the greatest military power.”

However, she believes the U.S. is coming out on the losing end: “The way this policy is being implemented—chaotically and without coordination—has major consequences not only for the U.S. but for the world,” she said. “The expectation is that the U.S. will face higher inflation and slower economic activity as a result of these trade barriers.”

Ms. Marques also noted that “the U.S. is facing a supply shock, while China is dealing with a demand shock. It’s always easier to stimulate demand than to increase supply.”

In her view, the current scenario presents opportunities for Brazil and other emerging markets—particularly if they deepen their international ties and seek out new trading partners. One such possibility, she suggested, is that the volatility caused by the trade war could accelerate negotiations on a long-pending trade agreement between Mercosur and the European Union.

She also pointed to the potential benefits of a weaker U.S. dollar. “A depreciation of the dollar could help ease inflation in Brazil and create room for interest rate cuts—assuming there are no new credit or fiscal stimulus measures to boost demand,” she said. “Important opportunities could arise for Brazil, but only if we do our homework.”

Mr. Camargo, meanwhile, warned that the U.S.’s reindustrialization efforts could end up isolating its economy. “The American economy is likely to slow under the weight of these tariffs,” he said. “It’s really very difficult to reindustrialize an economy by using tariff controls.”

*By Camila Zarur  — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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Brazil seeks biotech approval deal with China

At least ten GM seed varieties remain unused due to delayed clearance from Beijing

 

 

 

 

05/05/2025

Croplife Brasil—the organization representing biotech companies—along with the national associations of corn (Abramilho) and cotton (Abrapa) producers and the Brazilian Agricultural Research Corporation (Embrapa) will seek to advance negotiations with Chinese authorities for a long-awaited agreement on the synchronized approval of genetically modified (GM) crops.

At least ten GM seed varieties already approved in Brazil have not been planted because they are still under review in China—a process that can take up to eight years. Since China is the primary buyer of Brazilian soybeans and a major importer of Brazilian corn, exporting products containing traits not approved in China could trigger trade barriers.

Eduardo Leão, executive director of Croplife Brasil, said the goal is to sign a memorandum of understanding that would align approval processes between the two countries and open the door for China to export its own biotechnology to Brazil. “We are optimistic, as the timing is favorable. China has been investing more in biotechnology and gene editing, and there’s growing interest in exporting this technology to Brazil,” he told Valor.

While the Brazilian delegation is in China, the biotechnology committee of the China-Brazil High-Level Commission for Consultation and Cooperation (Cosban) will meet to address the issue. Mr. Leão noted that President Lula’s presence in the country will help “boost” the sector’s outreach.

“The relationship with China has reached a level of maturity, transparency, and clarity among the negotiating teams that is unprecedented,” said Luis Rua, secretary of international relations at the Ministry of Agriculture. “This has enabled significant progress.”

The National Union of Corn Ethanol (Unem) will also host a seminar with Chinese importers to promote dried distillers grains (DDG), a high-protein byproduct of ethanol production used in animal feed. Market access for DDG is one of the key items on Agriculture Minister Carlos Fávaro’s agenda during talks with Chinese authorities.

“This is a very opportune moment for Brazil to position itself, as two global powers are hitting each other with tariffs,” said Guilherme Nolasco, president of Unem. “This opens opportunities, and we must be ready to play. Brazil is the reliable alternative for food and energy supply.” He noted that Brazil’s efforts to sell DDG and ethanol to China began before Donald Trump returned to the U.S. presidency.

Brazilian orange juice exporters, meanwhile, are pushing for a tariff adjustment that would provide greater predictability in trade relations with China and potentially encourage future Brazilian investments in the country.

Currently, there are two export tax rates for orange juice—7.5% and 20%—depending on the temperature at which the product arrives at Chinese ports. The industry is seeking to unify the tariff at 7.5%, even though this lower rate currently results in higher energy and logistics costs.

*By Rafael Walendorff, Globo Rural — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Brazilian agribusiness missions head to China to expand market presence

Visits take place amid tariff war between Beijing and Washington

 

 

 

05/05/2025

Amid the ongoing tariff war between the United States and China, Brazil is sending its largest-ever delegation of agribusiness executives to the Asian country this week. About 150 representatives from various segments of Brazilian agriculture will travel to China for a series of meetings focused on market access, export expansion, and sanitary and tariff-related issues.

China is already the largest buyer of Brazilian soybeans and meat. Now, other segments of the agribusiness sector are looking to increase their footprint in the country, capitalizing on the momentum generated by trade tensions between Beijing and Washington. At least nine sectors will be represented in the delegation: beef, poultry and pork, corn, corn ethanol and DDG, fruit, coffee, cotton, citrus, and biotechnology. In 2024, Brazilian exports to China neared $50 billion.

The agenda includes business events organized by national trade associations with Chinese importers, missions to inland provinces to attract new buyers and study consumer behavior, and even the inauguration of a joint office in Beijing for Brazilian exporters of poultry, pork, and beef.

President Lula is also scheduled to visit China on May 12–13 to attend the China-CELAC Forum, and is expected to hold a bilateral meeting with Chinese President Xi Jinping. Agriculture Minister Carlos Fávaro and Silvia Massruhá, head of the Brazilian Agricultural Research Corporation (Embrapa), will also be part of the official entourage.

The scale of the Brazilian delegation is the result of several converging factors. Some organizations had scheduled their visits in advance, while others joined the initiative after the government confirmed President Lula’s trip, viewing the escalating tariffs between the U.S. and China as a strategic opening. Some executives had already planned to attend Sial China, the country’s largest food trade fair, taking place in Shanghai from May 19 to 21.

Both public and private stakeholders view this moment as a timely opportunity to strengthen ties with China and increase Brazil’s commercial presence there. “The massive presence of agribusiness leaders in China symbolizes this window of opportunity,” said Luis Rua, secretary of trade and international relations at the Ministry of Agriculture.

“It’s now clear that the reciprocal tariffs make U.S. products unviable in the Chinese market. Brazilian sectors see this as the right time to deepen relations and seize the chance to introduce new products,” Mr. Rua told Valor. “The trade war gives a boost to sectors that may not have been as well organized to operate in China. It’s important for Brazil to show that we’re a partner ready to engage when needed.”

The Brazilian Beef Exporters Association (ABIEC) and the Brazilian Animal Protein Association (ABPA) will open a permanent office in Beijing to solidify their presence. Beef producers aim to boost sales in inland Chinese cities, while poultry and pork processors are eyeing opportunities left by the U.S. absence.

In the fruit segment, the focus is on unlocking exports of melons and grapes, which are already authorized but have yet to gain significant market traction. The Brazilian Association of Fruit Producers and Exporters (Abrafrutas) is sending a 42-person delegation to better understand local preferences and market dynamics to negotiate more effectively with Chinese buyers.

“Properly positioning our product is essential to maintaining a long-term trade relationship. We’re fully capable of competing if we understand their needs and respond accordingly,” said Jorge de Souza, technical manager at Abrafrutas.

Though the mission was planned before Donald Trump returned to the White House, his renewed conflict with Beijing has become a “new factor” for Brazilian businesses. The U.S. is currently China’s top supplier of grapes, and Brazilian exporters are hoping to tap into the market during China’s winter months, from December to May, when local production is limited.

The coffee segment is also optimistic. Brazilian producers believe Chinese buyers are willing to pay a premium for Brazilian beans. Márcio Ferreira, president of the Brazilian Coffee Exporters Council (CeCafé), will be in China for meetings with government officials and participation in trade fairs. “There will be many initiatives to strengthen ties and expand coffee trade,” he told Valor.

*By Rafael Walendorff, Isadora Camargo and Cleyton Vilarino, Globo Rural — Brasília and São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Race for critical minerals gains momentum as Brazil eyes investment opportunities

The urgency to reduce carbon emissions to combat climate change has sparked a global race for minerals critical to the energy transition—one of the topics set to be discussed at COP30 in Belém. Brazil sees this movement as an opportunity to attract investment and boost its mining sector. The country holds some of the world’s largest reserves of critical minerals.

 

 

 

05/05/2025

CBMM unit in Araxá (MG): The company’s annual niobium production capacity exceeds current global demand — Foto: Divulgação
CBMM unit in Araxá (MG): The company’s annual niobium production capacity exceeds current global demand — Photo: Divulgação

According to the 2025 edition of the Mineral Commodity Summaries, a report by the US Geological Survey (USGS), Brazil advanced one position in the global rankings for rare earths and lithium in 2024, now occupying second and sixth place, respectively.

Marcelo Carvalho, executive director of the Australian mining company Meteoric, notes that of the 17 rare earth elements, four are essential for the production of magnets used in electric vehicle motors and wind turbines, making them critical to the energy transition.

“An electric car motor carries 1 to 2 kilograms of these rare earth magnets, while a wind turbine can carry up to two tonnes of this material,” he says.

Meteoric does not yet produce in Brazil but has a promising rare earth project in the Poços de Caldas region (MG).

“We have 1.1 billion tonnes of ore, which extends the project’s useful life to over 100 years,” Mr. Carvalho adds.

Lithium, indispensable for the manufacture of electric car batteries, requires 8.9 kilograms of the mineral per vehicle, according to the International Energy Agency (IEA).

Brazilian company Sigma Lithium, located in the Jequitinhonha Valley (MG), accounts for almost all of the country’s lithium production. The fifth-largest producer in the world, Sigma Lithium produces 270,000 tonnes of green lithium per year and is building a second unit, which is expected to double its production capacity.

According to the Ministry of Mines and Energy (MME), more than 50 projects are underway across Brazil and are expected to reveal new reserves of strategic minerals in the coming years.

“At a time when decarbonization is urgent, mining is considered the driving force behind this movement, which is essential for the preservation of the planet, with the supply of strategic inputs,” says Silvia França, director of the Mineral Technology Center (Cetem).

In addition to advances in rare earths and lithium, Brazil leads the world in reserves and production of niobium, a mineral used across segments, including electrification, mobility, and steelmaking. The country holds 94.1% of the world’s known niobium deposits. It also ranks among the global leaders in graphite, nickel, and manganese—essential materials for batteries and energy storage.

CBMM, based in Araxá (MG), is the world’s largest producer of niobium, with a production capacity of 150,000 tonnes per year, exceeding current global market demand. The company invests R$250 million annually in its technology program. In 2024, in partnership with Toshiba Corporation and Volkswagen Caminhões e Ônibus, CBMM unveiled the first electric bus powered by a lithium-niobium battery.

“This milestone not only demonstrated the technological feasibility of the project but also positioned Brazil at the forefront of innovation, showing that the country can contribute to more sustainable energy solutions,” says CBMM CEO Ricardo Lima.

In steelmaking, niobium enhances the properties of steel, helping to reduce CO₂ emissions throughout the production process.

Vale also contributes to lowering CO₂ emissions in steel mills by supplying the industry with high-quality iron ore. In addition to being one of the world’s largest iron ore producers, Vale ranks as the sixth-largest nickel producer and the 11th-largest holder of copper reserves, both critical for the energy transition.

In 2024, Vale produced 160,000 tonnes of nickel and plans to increase annual production to between 210,000 and 250,000 tonnes by 2030. In copper, the company produced 348,000 tonnes in 2024 and is investing to boost output to 700,000 tonnes by 2035.

Part of Vale’s nickel and copper production is based in the Carajás region (PA), where its iron ore operations are also concentrated. The company plans to invest R$70 billion between 2025 and 2030 in the Novo Carajás program, which encompasses iron ore and copper projects.

“Novo Carajás has the potential to position Brazil as a global leader in the supply of critical minerals and reinforce its leading role in combating climate change,” said Vale CEO Gustavo Pimenta.

According to the Energy Research Company (EPE), demand for critical minerals is expected to grow significantly by 2034, driven by the expansion of the electricity grid and the increasing electrification of vehicles. In EPE’s projections, demand for rare earths alone is expected to grow sixfold over the period.

Aware of the rising demand, Serra Verde Pesquisa e Mineração (SVPM), based in Minaçu (GO), is evaluating the possibility of doubling production before 2030 without shortening the useful life of its mine. The company began operations in January 2024 as the only producer outside Asia of the four critical rare earth elements: neodymium, praseodymium, dysprosium, and terbium.

“This makes Serra Verde a strategic asset for Brazil and the global market,” says SVPM president and Serra Verde Group chief operating officer Ricardo Grossi.

The company expects to produce at least 5,000 tonnes of rare earth oxide annually over the next 25 years.

Despite the promising projects, Raul Jungmann, president of Ibram—which brings together mining companies—points out that for Brazil to move beyond its role as a commodity exporter, it must overcome regulatory hurdles.

The National Mining Agency (ANM) acknowledges that the long gap between the initiation of research and the start of production remains a major bottleneck in meeting the growing demand for critical minerals, with projects taking an average of nearly 20 years to complete the entire cycle and commence production.

In 2024, the ANM authorized 4,630 mineral research projects and granted ten exploration rights, all related to critical minerals. The agency also reported that at least ten initiatives are underway to simplify regulations and expand legal certainty in the granting and management of mining titles.

Along with cutting bureaucracy, the government aims to stimulate investment in critical minerals by expanding project financing. In 2024, the BNDES, in partnership with the MME and Vale, launched a R$1 billion Critical Minerals Fund to support strategic mineral research, development, and mine implementation, with a focus on junior and medium-sized companies. Investments from the fund are expected to begin in the second half of 2025.

In 2025, with the support of the MME and in partnership with Finep, the BNDES opened a public call with a budget of R$5 billion for the submission of business plans that include investments in production capacity as well as research, development, and innovation for the transformation of strategic minerals and the production of processed materials or manufactured products aimed at the energy transition and decarbonization.

The public call is open until April 30, with the selection results scheduled to be announced by June 12.

“All these actions focused on critical minerals are part of the new industrial policy. Nova Indústria Brasil has been paying close attention to the green agenda, which is one of its strategic pillars, and to the innovation agenda,” says José Luis Gordon, director of Productive Development, Innovation, and Foreign Trade at BNDES.

The MME also launched the Guide for Foreign Investors in Critical Minerals for Energy Transition in Brazil last year and is closely monitoring the progress of bill 2780/24, proposed by Representative Zé Silva (Solidariedade-MG), which aims to establish the National Policy on Critical and Strategic Minerals. The bill is awaiting the opinion of the rapporteur in the Economic Development Committee. After it is voted on, the proposal will still be reviewed by the Environment and Sustainable Development, Mines and Energy, Finance and Taxation, and Constitution, Justice, and Citizenship committees.

*By Daniela Canedo — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com

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