Bank will also extend revolving credit line to the Chinese group’s dealerships
10/18/2022
André Novaes — Foto: Silvia Zamboni/Valor
Santander’s Brazilian subsidiary made an agreement with automaker BYD, known for its electric vehicles, and will finance the Chinese group’s cars and dealerships. BYD’s goal is to sell 10,000 units in 2023 and 20,000 in 2024. In the future, Santander and BYD may enter into a joint venture to create an automaker bank itself, as the institution already has with Renault, Peugeot, and Hyundai.
With this initiative, all the stages of financing the car – from analysis to credit approval, including payment plan options – will be carried out in Santander Financiamentos’ 100% digital network. The bank will also meet the needs of the BYD dealership network through “floor plan,” a revolving credit line with attractive conditions for the acquisition of vehicles.
“We chose a financial institution with significant participation, great market experience, and solid partnership with the main automakers in the country,” said Henrique Antunes, BYD’s chief sales officer in Brazil.
According to André Novaes, head of Santander Financiamentos, consumers will have access to Santander’s special conditions for the acquisition of electric models, as well as additional advantages, such as the possibility of contracting insurance by diluting the value in the installments of the contract.
In addition to the cars, the brand’s dealerships will offer a complete solution for the generation of clean energy by photovoltaic modules made by BYD itself, which can also be financed by Santander.
“We want to position ourselves very well in this world of electric cars. It still has a higher value, but if you do the math, over the years, with the savings in maintenance and fuel, it ends up having a more favorable dynamic. And the customer profile is one that also has a more sustainable behavior in relation to credit itself, so the default rate ends up being even lower,” said Mr. Novaes.
He says that electric cars still represent less than 1% of the bank’s automotive financing portfolio, but that the trend is for strong growth in the coming years. “It was like this with photovoltaic generation equipment, which seven years ago had a share of almost zero and today are already a relevant share.”
Currently, BYD has nine stores and representations in 31 Brazilian cities. By the end of the year, the forecast is to be in 45 cities and reach 100 venues in the country by the end of 2023. In Brazil, the automaker sells the models Tan EV (starting price at R$529,000), Han EV (R$529,000), and is in the pre-sale phase for the Song (R$270,000). The Yuan Plus model is expected to arrive soon.
“We arrived in Brazil’s retail this year, not yet a full year. In 2023, we expected to see bigger growth. Who knows, maybe in a few years we will be able to bring production here and have a critical mass to assemble an automaker’s bank, perhaps with Santander. We are still taking the first steps of a marathon,” said Mr. Antunes.
Mr. Novaes recalled that, like this agreement with BYD, Santander’s partnership also began as a white-label agreement and later evolved into the creation of a joint bank between the two companies. “In terms of product offering, there isn’t much difference, but we are taking the first steps, learning how this reality is, and setting up financing for the dealerships. These are the first steps in a long horizon, but maybe in the future it may evolve to create an automaker bank,” he said. Santander and BYD are also negotiating partnerships in other countries, especially in Europe.
Santander said it always studies lines from multilateral lenders aimed at financing electric cars. But for now, the partnership with BYD does not tap funds from this type of program.
Company has been fighting legal dispute with partner J&F for control of pulp producer Eldorado
10/18/2022
Paper Excellence has been fighting a legal dispute with partner J&F Investimentos for the control of pulp producer Eldorado — Foto: Divulgação
After having called the former president Michel Temer (Brazilian Democratic Movement (MDB) to advise it legally, Paper Excellence (PE), which for four years has been fighting a legal dispute with partner J&F Investimentos for the control of pulp producer Eldorado, has now hired the former governor of São Paulo João Doria as an “advisor”. Mr. Doria was also São Paulo’s city mayor and won the Brazilian Social Democracy Party’s (PSDB) primaries in November to choose the party’s presidential candidate, but later resigned after internal disputes.
According to sources close to PE, owned by Indonesian businessman Jackson Wijaya, the contract signed with D. Advisors Ltda, which has Mr. Doria and his son as partners, has the objective of prospecting new businesses. The mission would be to search for pulp and paper assets available for purchase in the country. PE has grown through acquisitions. In July, it agreed to buy the Canadian Resolute Forest Products, the third acquisition since it signed a contract with J&F in 2017.
On the other hand, the former-governor’s team, when asked about the possibility of the company having been hired to seek an agreement between PE and brothers Joesley and Wesley Batista, owners of J&F, said that Mr. Doria was hired to “evaluate and guide Paper Excellence,” but not necessarily “to make any kind of agreement.”
According to the registration with the Secretariat of Federal Revenue, D. Advisors was formally established ten days ago. The information about the hiring of Mr. Doria by PE was published by columnist Lauro Jardim, with newspaper “O Globo”, and confirmed by Valor.
According to two sources heard by Valor, Mr. Doria sought out Wesley Batista, with whom he has a long-standing friendship, to inform him about providing services to PE, which owns a 49.41% stake in Eldorado through CA Investment (Brazil).
Sources, however, say that a deal seems unlikely. On one side, the Batista brothers refuse to talk to any interlocutor other than Jackson Wijaya himself about an armistice. On the other, PE has been saying that it has already won an arbitration and there is no proposal from J&F to end the conflict – the Indonesian businessman, in turn, rejects another meeting with the brothers.
J&F and PE initiated in September 2018 the largest ongoing business conflict in the country, worth R$15 billion, over control of the pulp producer. PE won the arbitration unanimously, but J&F is trying to overturn the ruling, under allegations of conflict of interest of one of the arbitrators and that the partner would be behind a hacker attack on its email servers.
In the most recent development, about two weeks ago, the Civil Police of São Paulo included two PE executives in an investigation taking place in Diadema (Greater São Paulo) in connection with the hacker attacks.
The Prosecution Service is yet to decide whether there will be criminal prosecution. In a statement, the PE said it received the news with perplexity and recalled that an investigation with the same content, in São Paulo, has already been filed, also by recommendation of the São Paulo State Attorney General’s Office
Also in late September, the judge José Benedito Franco de Godoi, from the 1st Reserved Chamber of Business Law of the São Paulo State Appellate Court (TJ-SP), suspended a decision that could finally culminate in the immediate transfer of control of Eldorado to PE.
Both the funds for payment for the control of Eldorado – more than R$ 5 billion – and the shares held by J&F, or 50.59% of the pulp producer, are deposited in a court-held account. PE and J&F declined to comment.
*By Stella Fontes, André Guilherme Vieira — São Paulo
Data show that there are 1.67 million consumer units of power generated by their own photovoltaic systems
10/18/2022
Silvio Inada — Foto: Silvia Zamboni/Valor
In November 2021, when the water scarcity flag weighed on electricity bills and contributed to raising double-digit inflation, shop owner Silvio Inada was experiencing a different situation. Newly installed photovoltaic panels had already begun to capture the sunlight that poured onto the roof of his children’s clothing store in São Paulo. Today, the panels allow Mr. Inada to virtually reduce to zero the store’s electricity bill and cut his home’s bill by half.
Two or three years ago, the man said, he wanted to stop being a hostage, at least in electric power, of tariff increases, determined by the government or not, of exchange rate impacts, water issues, and the higher cost of thermoelectric plants. “I wanted to get away from that and have a more secure source of power.”
Mr. Inada’s store and home are part of the 1.67 million consumer units of power generated by their own solar photovoltaic systems, according to the Brazilian Photovoltaic Solar Energy Association (Absolar). Solar panels have been taking over roofs, facades, and terrains of homes, businesses, industries, rural producers, and public buildings in the country almost at the speed of light if compared to the evolution of the country’s total electric power capacity.
The power installed on rooftops totaled 13.7 gigawatts by October 15, a 48% growth in comparison to the 9.21 GW of production capacity that existed at the end of 2021. Installed power is projected to reach 18 GW by the end of this year, said Barbara Rubim, Absolar’s vice president of distributed energy. According to the 10-year power expansion plan of Empresa de Pesquisa Energética (EPE), this installed capacity is expected to reach 37.2 GW by the end of 2031. Today, photovoltaic power represents 98.1% of this type of generation.
The “power produced on the roof” is like the work of “little ants,” with their own generation of solar power spread throughout the country, said Daniel Pansarella, national manager in Brazil of Trina, a Chinese manufacturer of photovoltaic modules and cells for plants and residential systems.
He recalled that in 2017, just five years ago, solar power was predominantly coming from centralized production from large plants. At the time, distributed generation — power production for self-consumption — was still in its infancy. Today, there is growth on both sides, and the “ants” power is leading, said Matheus Rodrigues, product manager at Trina.
According to data from Absolar, the installed capacity of solar power in 2017 was 1.16 GW, with 84% in a centralized generation. By 2020, this outlook was inverted, and today distributed generation represents 68% of all installed solar PV capacity. The advance of distributed generation resulted in investments of R$25.9 billion from January to October, and totaled R$73.9 billion in amounts invested since 2012. The result is 54% higher than the investment in the decade ended in 2021.
The solar source, including power centralized in large plants, reached 20.25 GW in installed capacity in October, which represents almost a tenth of the country’s power generation mix. The share was 7.4% at the end of last year and 4.5% in December 2020, according to Absolar and the Brazilian Electricity Regulatory Agency (Aneel).
The fast growth of the “ant” projects is credited by consumers and companies in the sector to factors such as the expensive electricity bills, a perception intensified by the recent water crisis that Brazil went through, and Law 14.300, which was signed in January and is considered the legal framework of micro and mini generation.
According to this law, Ms. Rubim says, consumers who request access to the grid for their own solar systems until January 6 of next year will be free of the so-called “solar tax” until 2045. Because of this, she said, people are bringing forward the decision to install the systems.
Rodolfo Meyer, a partner of Portal do Sol, a company that installs photovoltaic equipment, says that the deadline for more beneficial taxation is expected to still make a difference until the end of this year, although from April to mid-September he has noticed less enthusiasm in the demand for solar power. In his view, this is due to the uncertainty concerning the presidential elections and also to the high key interest rate, which makes credit more expensive.
According to Mr. Meyer, more than half of acquisitions are financed. Photovoltaic equipment has become more affordable over time, but there is also the exchange rate effect since the main components are imported, said Ms. Rubim.
Even though the sunlight still comes for free, the decision to produce one’s own photovoltaic power took a while to get off the drawing board because “the costs were prohibitive,” said Mr. Inada. The shop owner decided to make the investment last year. The R$40,000 invested in the installation of the 800 kW photovoltaic equipment still cannot be considered a low price. “The equipment is still expensive, but the cost of electricity has become too high as well.”
Mr. Inada did not take out a loan to bet on solar power, but he calculates that the credit terms he would get at the time would result in a monthly obligation with amortization and interest close to the discount he sees today on his electricity bills.
Brazil’s key interest rate Selic at 13.75% per year changes this equation a little, but, according to Mr. Meyer, part of this impact seems to have been absorbed by consumers, who have already made the calculations with the new interest rate and are studying photovoltaic projects again since September. Regardless of this scenario, he says, the company expects to more than double its revenues this year in comparison to 2021, and also double the number of franchisees.
In his view, the change in tax generated by Law 14,300 may bring a hiatus to the market next year, for a few months, but in the long term, the sector is likely to remain heated. According to him, the effect of the change in tariff collection for the recovery of investment is “marginal” and depends on how much of what is generated of power will be consumed simultaneously and how much will be injected into the network.
The effect of inflation on the electricity bill also needs to be factored into the bill and ends up offsetting this, said Mr. Meyer. “This market is growing because it makes financial sense. It is a green economy with gains.” It must also be remembered, he says, that the ongoing technological change points to an ever-increasing demand for electricity. He exemplifies the market evolution of electric cars and batteries.
Technological evolution also allows for payback in shorter timeframes today, Mr. Pansarella says. “In 2012 or 2013 the payback was in 10 years. Today, payback is already possible in five years.”
Data from Absolar show that the energy from the roof is led by homes, which represent 48.5% of the installed power. Commerce and services come right after, with 30.1%.
About 70% of the residential public demands a system capable of generating between 500 kW and 700 kW monthly, with an investment between R$25,000 and R$30,000, generating savings of R$6,000 to R$7,000 annually. If it is a place in Minas Gerais, the payback is faster. If it is in a rainier region, like Santa Catarina, for example, it takes longer.
In his store, Mr. Inada does the math. By virtually reducing to zero the electricity bill, he cut the costs of his business, and the possibility of compensating for the surplus in his home’s bill also helps to make ends meet. He expects to recover the investment in four years. The seasonality of solar power generation is already priced. At the current moment of the year, with cloudy days and rain, he said, his system has been generating something like 60% of the installed power.
If the equipment were more affordable, he could also install solar panels on the roof of his house, he said. But for now, the shop owner is waiting for the thermometers to indicate warmer days in the coming summer when his own power generation will probably peak.
The country may account for more than half of exports in the 2022/23 global season
10/17/2022
Sugar production in Europe; Brazil is expected to export 30 million tonnes of the product in 2022/23 season — Foto: Dario Pignatelli/Bloomberg
Brazil is expected to continue to dominate the sugar market in this global season 2022/23, which tends to be marked by a small surplus in production. The latest rains in the Center-South of the country contribute to this scenario, which have helped in the development of crops for the next local season.
Brazilian mills may export 30 million tonnes of sugar in the 2022/23 local season, estimates Plinio Nastari, president of Datagro, a consultancy firm specialized in agriculture. If confirmed, this volume would be more than half of the sugar to be traded in the current international cycle — the consultant foresees global shipments of 57 million tonnes.
With this, the distance between the shipment volumes of Brazil and India, the second-largest exporter of the commodity, is likely to grow. The authorities in New Delhi indicated that they should issue export licenses for 8 million tonnes in this cycle, below the 11 million of last year’s season.
India will probably produce 36 million tonnes of sugar this harvest, already considering 4.5 million tonnes converted to produce ethanol, according to Datagro. India’s biofuel program has limited the country’s ability to compete with Brazil in the sugar market. Since 2017, the production of ethanol has seized 15 million tonnes of sugar, the consultancy says.
In Brazil alone, the Center-South may produce 36 million tonnes in the next local crop (2023/24), and there are still the volumes of North and Northeast regions. The increase of the Brazilian relevance in the global market raises the impact of climate and fuel prices in the country on global prices.
The difference between global supply and demand in 2022/23 is expected to be narrow, 1.87 million tonnes, Datagro predicts. The calculation, presented last week at a dinner with executives of mills that Citi Brazil promoted in Ribeirão Preto, in the countryside of São Paulo state, is similar to others in the market, such as that of Itaú BBA, which recently forecast a surplus of 2.1 million tonnes.
But this slight slack can be dilated. Mr. Nastari doesn’t rule out that production in South-Central Brazil is 2 million tonnes higher than the initial forecast, which would increase the surplus to 3.8 million tonnes.
Some mills already signal a scenario of robust supply in the next harvest. Mill Coruripe, for example, believes that the rains are favoring its crops so much that there may be more cane than it can crush in a normal cycle.
“If the rains continue, there will be 1 million tonnes more than capacity,” says CEO Mario Lorencatto. Today, Coruripe can grind up to 15.2 million tonnes per harvest in its five plants in the states of Minas Gerais and Alagoas. The company is already expanding its capacity in Limeira do Oeste, in Minas Gerais, by 1 million tonnes, and will add a sugar plant to this distillery.
Investments like that, however, are the exception in the sector. “The companies are reluctant [to invest in capacity] because of the increase in interest rates,” says André Cury, in charge of the Commercial Bank of Citi Brazil. According to him, even with the good prices last year, the mills opted to generate cash and reduce leverage, which is currently close to 1.15 times.
In São Paulo, the productive picture is also favorable. Usina Santa Isabel, which has two units in the state, expects, with the crushing of this season and the next, to recover a good part of the losses with the 30% decrease it had in the last cycle, says chief financial officer Fabio Montecchio. In the current cycle, crushing may reach 5.6 million tonnes.
Despite the ample supply, the international trade scenario continues to favor price increases, believes Mr. Nastari. The prices continue 30% above the level of two years ago, near 17.8 cents a pound, and the consultant sees room to reach 19.50 cents a pound until March.
In part, price maintenance is in global demand. Datagro estimates that consumption will increase by 2.5%, above the average of the last decade, which was 1% per year.
In private meetings with investors in Washington, policymakers emphasized commitment to goals
10/17/2022
Banco Central
With the monetary tightening cycle over and the Selic benchmark interest rate at 13.75%, the Central Bank tried to demonstrate a vigilant attitude with the conduct of monetary policy in private meetings between directors and investors in Washington, in the scope of the meetings of the International Monetary Fund (IMF) and the World Bank.
Market participants heard by Valor on condition of anonymity emphasize the cautious tone of the Brazilian monetary authority and the emphasis given to the willingness to bring inflation back to the target.
Roberto Campos Neto, Central Bank’s president, took part in two meetings closed to the press on Friday and tried to reinforce his commitment to make inflation converge back to the targets. In one of the meetings, he reportedly said twice that he wanted to convey the message of serious commitment to the target, besides being concerned, in particular, with the dynamics of services inflation.
Mr. Campos Neto’s statements come in the wake of movements in the interest rate market that point to the possibility of the Selic rate cuts cycle starting as early as March 2023. He also stated, in one of the meetings, that the Central Bank’s job is to bring inflation back to the target and that the monetary authority will do whatever is necessary for this to happen.
Mr. Campos Neto was even questioned in one of the events about the behavior of inflation expectations and about when the cycle of Selic cuts might start. And, when analyzing the market’s behavior, the president of the Central Bank stated that part of the expectations of interest rate cuts embedded in the curve are more related to technical positioning and the probabilities of the scenario ahead.
Thus, according to one of the participants, Campos pointed out that the yield curve does not necessarily place reductions in the Selic faster than the Focus.
Thus, according to one of the participants, Mr. Campos Neto pointed out that the yield curve does not necessarily place cuts in the Selic rate faster than Focus, Central Bank’s weekly survey with economists.
In the Focus published last week, the median expectation of market economists is that the cycle of Selic cuts will start in June 2023, when the relevant horizon for the conduct of monetary policy will already be fully in 2024. A market professional present at one of the meetings even pointed out the perception that the Focus scenario, with the start of the easing cycle in June, still seems to be the most adequate for the Central Bank, at least for the moment.
Mr. Campos Neto was also questioned about the Brazilian fiscal situation and, in the perception of market participants, adopted a slightly more optimistic tone with the public accounts, although he emphasized the uncertainty in the scenario. “He noted that the data are coming in very good and better than expected, but also said that there is a degree of uncertainty in the future,” said one of those present.
This same source observes that Mr. Campos Neto, in his presentation, compared fiscal measures that have been implemented to contain the surge in energy commodity prices and noted that the measures adopted in Brazil are below the actions of other countries. “This set a tone of less concern about fiscal policy. It seems that the caution in this area is more in the long term, in the fiscal framework,” said the source.
Also present in Washington, Fernanda Guardado, Central Bank’s director of international affairs and corporate risk management, took part in a private meeting with investors, in which she used a more cautious tone when talking about the fiscal uncertainties ahead.
Ms. Guardado also maintained a more concerned tone when speaking about fighting inflationary pressures. According to market players, she was attentive to the existing uncertainties in the labor market and the degree of economic slack. A person who was present at the meeting stated that Ms. Guardado was in a more cautious position in relation to unobservable factors, such as the output gap (a measure of the economy’s slack), given that there were significant revisions in the economic scenario, which started to show a more closed gap.
In the September meeting of the Monetary Policy Committee (Copom), Ms. Guardado was one of the dissenting votes, defending an additional 25 basis points increase in the Selic, to 14%. The majority of the committee, however, voted to maintain the key interest rate at 13.75% at the meeting.
The only event open to the press in Washington with the presence of Roberto Campos Neto took place on Saturday, at a Group of 30 (G30) seminar. During his participation, he observed that the domestic interest market has begun to price the beginning of a cycle of Selic cuts in March 2023 and stated that this could mean “that the markets understand that we have done our job”.
Mr. Campos Neto also pointed out that Brazil has had three consecutive months of deflation. “A lot of that was because of government measures, so we don’t think it’s a special reason to celebrate. But the dynamic is improving,” he stated in the opening of his panel at the event.
Company has become Brazil’s first carbon-neutral steelmaker
10/17/2022
Silvia Nascimento — Foto: Silvia Zamboni/Valor
At a time when there is a global race for decarbonization in the steel industry, the largest emitter of carbon dioxide in the industrial sector, Aço Verde do Brasil (AVB), a small long steel mill in Açailândia, Maranhão, has already overcome this challenge. The company already manufactures its steel without using fossil fuels. This has earned AVB — which has only seven years of operation — a certification issued by SGS as the first carbon-neutral manufacturer in this segment.
The mill’s emissions, measured since 2018 by SGS, were 0.1 tonne of CO2 per tonne of crude steel manufactured that year. In the following ones: 0.06, -0.04 and 0.02 tonne of carbon dioxide. The small increase in 2021 is linked to the start-up of the blast furnace 2. The measurements followed World Steel Association (WSA) standards.
The world average of CO2 emissions in the steel sector, involving the various types of mills, is 1.84 tonnes of CO2.
Silvia Nascimento — a shareholder together with other members of the Nascimento family — has been in the executive command of the company since April and wants more. “Our goal is to make AVB also a company with zero waste generation.” To achieve this, she is investing in projects to turn this waste into co-products for use in the company’s own facilities.
“We don’t use fossil fuels and we reuse all the gases emitted at the plant in production equipment operations,” she said. “And now we will reuse all the waste.”
While increasing steel production, after starting operation of a new blast furnace, the company is investing nearly R$70 million in a thermoelectric plant to generate 12 MW of energy from the recovery of gases generated in the production process. It is expected to be completed by the end of this month. The energy generated in the thermal plant will supply one third of the company’s consumption. It will replace part of the renewable energy that is currently purchased.
“Our philosophy is sustainability,” says the businesswoman and executive, a native of Belo Horizonte, capital of Minas Gerais state, who was “summoned” by her father at the end of 1999 to help him run the business of the Ferroeste group. “I have been with the company for 23 years. I left several things behind in the United States, where I was at that time, and became more involved in the family business.”
Since then, she has held leadership positions in the companies of the group. In 2008, a project arose to add value to pig iron, made by Gusa do Nordeste, and steelmaker AVB was created from this base in Açailândia.
The project faced some obstacles, including the global financial crisis (Lehman Brothers’ bankruptcy), which scared away potential financing and affected the purchase of equipment. After several years of persistence and investments of over R$1.5 billion, says Ms. Nascimento, the steel mill was ready. It started operating at the end of 2015 producing pig iron and billets.
Three years later, the company began with the rolling mill equipment, able to make 600,000 tonnes per year. It has become the largest long steel mill in the Northeast region.
The time of the steel mill construction process allowed the company to improve the project, the executive said. “We have a business that goes from planted eucalyptus forests, to make the biocarbon for the pig iron blast furnace, to the final product. We even have a gas factory installed in the plant, which is common only in large steel mills,” said Ms. Nascimento.
The executive has a degree in Business Administration from the University of Miami, where she lived for nine years, three of which in a boarding school. In Brazil, she took the Program for Development of Managers (PDD) at Fundação Dom Cabral, near Belo Horizonte, in 2004.
After that, a full dedication to the company. She has held several positions at AVB, until reaching the top, when she became CEO. Most of her time is divided into managing office in the capital city of Minas Gerais, where she lives, the mill in Açailândia — monitoring the operation — and São Paulo, for contacts with the financial market.
In 2021 and this year, the company issued two Certificates of Agricultural Receivables (CRA), totaling R$650 million, to strengthen its capital structure and invest in the eucalyptus reforestations (more than 60,000 hectares) it has in Maranhão and Piauí. Also at the end of last year, AVB obtained approval with the Securities and Exchange Commission of Brazil (CVM) in the B category (over-the-counter securities).
According to the executive, the company acts as if it were already publicly traded, publishing its earning reports on a quarterly basis and advancing in corporate governance. For 2023, for example, at the next shareholders’ meeting, she intends to appoint three independent board members. Today the board is formed by her, her father (who chairs it), her brother, and her sister. The members will be people with experience in the real estate market, sustainability, and the financial sector.
Is all of this a preparation for a future IPO on the stock exchange? Ms. Nascimento does not deny this, but says it is still too early to decide on an IPO.
In addition to logistics costs, exporters are impacted by the high volatility of the foreign exchange rate, the growth of global trade barriers and the “Brazil cost”
10/17/2022
The rise in fuel prices and the disruption of global transport chains have put the price of international freight at the top of the problems faced by Brazilian exporters. This is what shows the survey conducted by the National Confederation of Industry (CNI), still unpublished, seen by Valor. In addition to logistics costs, exporters are impacted by the high volatility of the foreign exchange rate, the growth of global trade barriers and the “Brazil cost.”
Jose Velloso — Foto: Leo Pinheiro/Valor
“The purpose of the survey was to have a snapshot of the complaints of Brazilian exporters,” said Constanza Negri Biasutti, CNI’s trade policy manager. “We understand that it should be the main base for trade policy strategies from now on.”
The survey was answered by almost 600 exporters of all sizes, which evaluated 43 different obstacles.
Logistics had already been pointed out as a critical point in the most recent edition of the survey, 2018, but the problem became much worse with the pandemic, said José Velloso, head of the Brazilian Machinery Builders’ Association (Abimaq).
Even as the most acute phase of the pandemic has passed, the maritime routes are still disorganized and there is a lack of containers, said Luis Rua, the director of markets of the Brazilian Association of Animal Protein (ABPA).
Before the pandemic, 80% of the ships arrived at Brazilian ports in the estimated time, he said. Today, only 30% manage to do so. This impacts land logistics and document flow, with increased costs. In addition, the delay in shipment may lead to the collection of fees by the ships for the delay.
The cost of international freight and the lack of containers are also pointed out as an obstacle by the Brazilian Association of the Cosmetic, Toiletry and Fragrance Industry (Abihpec). The CNI survey indicated results for the sector convergent with the nationwide snapshot.
The Economy Ministry informed that the international freight cost was $1,500 in May 2020, then peaked at $11,100 in September 2021. In the first week of this month, it was at $3,700. The values refer to the transport of a 40-foot container considering the Freightos Baltic Index (FBX), the industry’s benchmark.
The hikes are explained by the higher demand after restrictive measures to locomotion, increase in fuel prices, and reduction in the transport offer. The recent drop is related to lower fuel prices and reduced global demand for goods.
The logistics costs occupy four positions among the five biggest problems pointed out by Brazilian exporters in the survey. The second most cited problem is the high tariffs charged by the ports.
This complaint is related to the charge of cargo screening fees by ports, said Ms. Negri. Since 2016, CNI has been discussing the illegality and abusiveness of this fee at the National Agency for Waterway Transport (Antaq). CNI alleges that the task should be performed exclusively by the Secretariat of Federal Revenue. There is, however, a double screening.
The cost of domestic transportation is the third most pointed out problem in the survey. Mr. Velloso believes that infrastructure concessions, which have gained momentum since the Temer administration, are in the right path. However, it will still take time before domestic transportation problems stop being a factor in the loss of competitiveness of Brazilian products.
“These obstacles pointed out as the main ones shed more light on the need for Brazil to attack this logistics and foreign trade agenda,” Ms. Negri said.
Improving this point would support gains in other fields showed by the survey – such as the time spent on customs clearance, shortened with the implementation of the Single Foreign Trade website. Customs bureaucracy, indicated as a critical obstacle by 39.56% of the companies in 2018, was now listed by 21.9% of them.
The main exporter of products from the manufacturing industry, the machinery and equipment sector highlights the so-called Brazil cost, said Mr. Velloso. For example: imported inputs are about 20% to 30% more expensive than in other countries because of customs clearance costs, import taxes and the foreign exchange rate.
Several tax rules, complex and interpreted in different ways by government agents, are also the target of exporters’ complaints. According to Mr. Velloso, Brazilian products are exported with nearly 7% of their value in taxes that should, but were not eliminated along the production chain.
In his view, the three main steps to be taken by the next administration should be: approve a tax overhaul (more specifically, the proposal to amend the Constitution 110, which is pending only the approval by the Senate) and the restoration of the insurance instruments and export credit.
The Economy Ministry says that it has taken measures to soften the impact of higher commodity prices and transportation costs. It cites the 20% reduction in import tax rates for almost 90% of products. In addition, the rate of the Freight Additional for Renewal of the Merchant Marine was cut to 8% from 25%. A third initiative was the exclusion of the terminal handling charge from the calculation basis of the import tax.
Increasingly present in the national production chain, the import of services was included in the drawback regime. Thus, the collection of taxes will be suspended for services used in the production of items for the foreign market.
The ministry also highlighted the Single Foreign Trade website, with which the average time spent by a company to import fell to nine days from 17. At the current stage, this tool can be used for about 30% of foreign purchases.
The website also reduced the clearance time for exports to less than five days from 13. According to the ministry’s calculations, the savings with less delay reach $30 billion a year.
Company toinvest R$56.2m in Paulínia unit until the end of the year
10/14/2022
Xavier Andivia — Foto: Divulgação
Boehringer Ingelheim’s Animal Health division in Brazil has been growing above the nationwide average, and in order not to lose traction the company will invest R$56.2 million by the end of the year in its plant located in Paulínia (São Paulo). In the last two years, the plant has already received R$92.2 million in investments.
“We want to secure the supply of our products, preserve our value chain and avoid emergencies and unplanned costs,” said Xavier Andivia, who took over the command of the division in July.
According to the National Union of Animal Health Products Industry (Sindan), the segment grew 21.9% in the first quarter and 7.6% in the second quarter, compared to the same periods in 2021. Boehringer Ingelheim advanced 34% and 11.2% in the same comparisons. The company does not inform its revenue in Brazil.
“Despite the war [in Ukraine, which increased production costs] and inflation in the world – and in Brazil – animal production is very strong. We are not exempt from the impacts, but our team has been able to bring great results in all segments,” the executive said.
The Paulínia plant is important for Boehringer’s strategy because, besides supplying the Brazilian market, it also produces medicines that are exported to 70 countries – mainly antiparasitic for pets and bovines.
“We will not stop investing, as we have to increase production and be more efficient. We have long-term investment plans, which involve investments in people and technology. The demand for Paulínia’s products grows worldwide,” Mr. Andivia says.
The drop in the Chinese demand for imported pork and low beef prices due to the livestock cycle are on Mr. Andivia’s radar. But, according to him, the company is expected to continue growing at double-digit rates in Brazil.
Stocks of the two giants have the largest share since 2014
10/14/2022
On Thursday, Vale ON represented 15.448% of Ibovespa’s theoretical portfolio, while Petrobras PN accounted for 6.966% — Foto: Divulgação
In every four trades carried out in B3’s stock market in October, at least one involved Vale’s common shares or Petrobras’ preferred stock. It is the first time that the two heaviest assets of the stock exchange reach the level of 25% of market turnover since 2014, when it was at 25.16%, according to a TradeMap’s survey made at Valor’s request.
Even with the slowdown of the global economy and mounting fear of recession, which generate uncertainty for commodities, the increase in the participation of international investors in the local market in recent months helps to explain the movement. This is because the group usually prioritizes securities with more liquidity, like the two commodity producers and big banks. On Thursday, Vale ON represented 15.448% of Ibovespa’s theoretical portfolio, while Petrobras PN accounted for 6.966%.
Specific factors impacted the appetite for shares. The oil company reacted well to the result of the first round of Brazil’s presidential election, with a tight dispute and the election of a more conservative Congress, which in theory favors a privatization drive. The mining company had a negative performance after becoming the target of Cosan, which acquired up to 6.5% of its shares.
Gabriela Joubert, Inter’s chief analyst, says that in October foreign investors have once again shown a greater preference for the Brazilian stock market due to the momentum of the local economy compared to developed and emerging countries. “Developed countries are starting or in the middle of a cycle of interest rate hikes, while there is already a discussion about cuts here,” she said. “And emerging countries, especially China and Russia, are going through particular difficulties and global problems.”
Ms. Joubert says the macro panorama already helps the Brazilian stock market and, when foreign investors look at Brazil, there is a preference for companies like Vale and Petrobras. Her perspective for the future is that foreigners will continue to see attractiveness in B3.
Along these lines, this month, foreign investors made a net contribution of R$1.2 billion in shares listed on B3 by October 10. This year, international investors have invested R$71.26 billion. In the same period, local institutional investors withdrew R$105.06 billion, and individual investors took R$2.44 billion out of the market.
But despite the high turnover involving the two securities, their performances tell different stories. Vale, which is down 6.83% this year and had already been depreciating in recent months with the slowdown of the Chinese economy, suffered an additional blow after Cosan unveiled that it is buying up to 6.5% of the mining company’s shares, in an offensive that part of the market saw as the first step in an attempt to take control of the largest company on the stock exchange.
“There was a strong correction in the stock, to R$62 in September from a level above R$100 in March, following the uncertainties in China. With this, the positioning was low, and some asset management companies were short on the security, which boosted some purchases. But at the beginning of last week, this dynamic got stronger and the rumors that something was happening started,” said Antonio Heluany, a partner and a commodities analyst at Taruá Capital.
He understands that, thinking in longer terms, Cosan’s incursion into Vale is positive. In his vision, the mining company will be able to benefit from the presence of an executive “with an industry head” in its board, helping the company to have a direction for the future beyond the distribution of dividends in the market.
However, he points out that the investors’ disappointment may have come after frustrated speculation regarding the increase in the securities’ turnover. “As the company was already looking to unlock value from the base metals business, a move in this direction could have had a greater impact. Cosan’s entry, on the other hand, is not an event that gets the securities moving in the short term.” At the moment, Taruá is exposed to Petrobras, but not to Vale.
Inácio Ponchet, CEO and manager of Lato Capital, also cites concerns with the current level of iron ore. He says he still doesn’t like the signals from the Chinese economy and also shows concern with the European scenario, since the production capacity has been reduced by 50 million tonnes due to the energy crisis.
“Nobody knows how Europe will come back from the crisis. However much the price of gas recedes, it won’t necessarily return to the level of when the continent had the subsidized Russian product. And I don’t see China’s economy coming back fast either, so ore may remain under pressure. Oil, on the other hand, seems a little more protected because of the supply restriction,” he said.
Petrobras preferred stock is up 74.08% in 2022, the third-best performance at Ibovespa. There was a further gain in October after the result of the first round of elections pointed to a tight race for the presidency and a more right-wing Congress, in theory less inclined to state intervention in the economy and state-owned companies.
“Foreign investors seem more relaxed than local investors about the outcome of the election, but we can certainly have impacts on Petrobras. I understand that in case Bolsonaro wins Petrobras is the cheapest company on the stock exchange, with great chances of appreciation. If Lula (Workers’ Party, PT) is elected, I understand that there will be a waiting period until the announcement of the new CEO of the company and the details of its investment plans,” said Mr. Ponchet. The manager has, through the index, a position in both companies.
Mário Braga, an analyst at Control Risks, says that a potential Lula da Silva administration is likely to adopt a pragmatic posture in relation to the business environment and try to move forward with structural reforms in 2023, especially a tax reform. It should focus on simplifying the system, but come with more taxes on the richest and possibly on some sectors, such as mining and oil & gas.
“To compensate for the potential loss of revenue, the government will probably seek the introduction of taxes on dividends and wealth. Considering a broader green agenda, the reform is likely to also favor eco-friendly industries or products, such as renewable power or electric cars,” says Mr. Braga.
“There will probably be an appetite to raise taxes [and royalties] for the mining sector. It is unlikely, though not impossible, that the next government will take a similar approach to the oil and gas sector and resort to a tax to cushion price shocks as well. As long as the global markets for metal commodities and energy remain strong globally, companies in these sectors in Brazil will remain more exposed to risks of tax increases,” he added.
Retailers and telcos will also be subject to sanctions if they have sold smartphones in the same conditions
10/14/2022
Apple filed a writ of mandamus asking the granting of injunction suspend the decision — Foto: Jeenah Moon/Bloomberg
The 18th Civil Court of São Paulo determined on Thursday that Apple will pay a fine of R$100 million for selling iPhones without a charger. And retailers and telecom operators that sold Apple phones without a charger are subject to the same penalties imposed on the manufacturer, including fines, search and seizure of devices, says Rodrigo Roca, head of the National Consumer Secretariat (Senacon) of the Ministry of Justice.
“We will start administrative proceedings against every retailer who disobeys our determination,” Mr. Roca told Valor. The lawsuit linked to the R$100 million fine was filed by the Brazilian Association of Borrowers, Consumers and Taxpayers (ABMCC). Apple will also have to deliver a charger for those who bought a model that comes without the accessory in Brazil. The court decision can be appealed.
At 6:20 pm this Thursday, Apple filed a writ of mandamus in the 20th Court of the Federal District, asking “the granting of injunction to immediately suspend any and all effects […] against Apple and its resellers”. This Friday the new iPhone 14 starts being sold in the country, without charger. The brand’s cell phones are sold without charger since 2020.
According to the Retail Development Institute (IDV), which represents 72 associated retailers, the responsibility for offering the charger lies with the manufacturer. “The industry must respond for their strategic decisions to launch products, officially offered to the market, not fitting to retail, which, as everyone knows, sells the products purchased from industry, any responsibility,” the institute said in a statement. Conexis, the organization that represents the operators, did not reply to a request for comment.
Mr. Roca pointed out that Thursday’s court decision, which mentions a provisional remedy applied by Senacon, opens an important milestone in the judiciary’s perception of the issue. “Apple has already been the target of previous administrative sanctions coming from [Consumer-protection watchdog] Procon in São Paulo, Rio de Janeiro and Fortaleza, including million-dollar fines, but it continues in the infringing practice,” Mr. Roca said. “And there is no news of payment of fines so far.”
In early September, the Ministry of Justice determined the suspension of the sales of all iPhone models without charger and imposed a fine of more than R$12.2 million to Apple, in a decision published in the Daily Gazette on September 6. On September 12, Senacon sent administrative notices to Apple product resellers informing them of the penalties related to selling the device without the accessory considered essential to the operation of the devices.
For Mr. Roca, the argument that the charger removal follows a sustainable manufacturers’ agenda is flawed and overdue. “If the charger harms the environment, the initiative is 12 years overdue because no one gave massive warning in a campaign about conscious disposal of these items.”
Mr. Roca notes that the Ministry of Justice’s determination is not restricted to smartphones. “No device can be sold without items essential to its operation.”
The sale of smartphones without wall chargers is not exclusive to Apple. In October last year the Ministry of Justice notified Samsung and Apple again for non-compliance with an administrative decision made in 2020 on the subject.
Some Samsung devices, such as the Galaxy S22 line, launched earlier this year, are sold without a charger in Brazil. However, the manufacturer offers a free charger to consumers who wish it.
“We reinforce that the company always offers the consumer the option to redeem the charger, free of charge, when the product does not bring the accessory inside the box,” the manufacturer stated.
The compatibility of electric and electronic equipment chargers is also a concern in Europe. On October 4, the European Parliament approved legislation that standardizes the charging ports for cell phones and electronic equipment sold in the countries of the European Union. The measure adopts USB-C as the standard charging port in the European bloc and will force Apple, for example, to modify its iPhones, which currently use Lightning connector. By the end of 2024, all cell phones, tablets, and cameras sold in the bloc must have the USB-C standard. Laptops must be adapted by the end of 2026.
At the end of June, telecoms regulator Anatel opened a public consultation in order to define technical requirements for the standardization of wired smartphone chargers to the USB-C port.
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/s/d/fENOokTHmhTEtMvuKe4Q/18fin-200-santa-c2-img01.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/e/H/tAoP6zTASdBOBefVfBvQ/18emp-100-eldo-b3-img01.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/J/3/yioFz7RpSIKcmGCpUbUA/18bra-100-solar-a4-img01.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/a/i/Lj61PCRXuiltI8NHhZ1Q/17agr-100-acucar-b10-img02.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/0/M/LcJlPGQJ2jBbD9zuAJdQ/140922aco-20verde21.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/q/X/B5JRwvRUKgoaqfio38vw/27emp-300-abimaq-b4-img01.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/M/r/R0pjTATJCiKlrA2bHBjg/14agr-300-boher-b10-img01.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/2/B/b5XmeNTPKG00Nn0htteQ/14fin-100-vale-c6-img01.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/w/M/BuCRITTiyxVtpAw5fI5Q/14emp-100-apple-b7-img01.jpg)