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Brazil petchem industry flags Reiq 2026 gap

Brazil petchem industry flags Reiq 2026 gap

Sao Paulo, 2 February (Argus) — Brazilian chemical and petrochemical industry associations are urging the federal government to deliver a rapidfix for the 2026 gap in the Special Chemical Industry Regime (Reiq), warning that regulatory uncertainty is accelerating plant shutdowns and job losses across key production hubs. In a joint letter sent on 26 January to vice-president and industry minister Geraldo Alckmin, labor unions and industry groups — including Abiquim — said presidential vetoes affecting Reiq in December by removing key tax-relief provisions and carried into the newly enacted Special Sustainability Program for the Chemical Industry (Presiq), which focuses on the national petrochemical chain modernization,have created an "immediate and severe" impact on domestic producers, mainly due to the sudden loss of a long-standing cost-reduction tool with no transitional safeguards. Companies in Sao Paulo state have already closed units and cut shifts in Cubatao and Guaruja, according to the groups. Industry groups argue that without the Reiq tax relief, historically centered on PIS/Cofins reductions for feedstocks such as naphtha and natural gas and effectively revoked by the presidential vetoes — Brazil's chemical chain faces intensified competitive pressure from global oversupply, foreign subsidy schemes and aggressive pricing from Asian and Middle Eastern exporters. The regulatory gap is prompting irreversible divestment decisions, threatening the core of Brazil's petrochemical complex, they say. The entities called on the Ministry of Development, Industry, Trade and Services (Mdic) to restore predictability for 2026, saying the issue is no longer a tax debate but a strategic decision for Brazil's industrial competitiveness and employment base. The government has recently highlighted industrial policy priorities through its New Brazil Industry program and strengthened trade-defense tools, but the signatories said action on the Reiq must come "urgently, preferably in January," to avoid further disruption. History President Luiz Inacio Lula da Silva vetoed provisions in December 2025 that would have extended Reiq benefits into 2026 or ensured an automatic transition to the Presiq framework. The administration cited fiscal responsibility and the absence of compensatory budget measures. With Presiq scheduled to begin only in 2027, the vetoes leave a regulatory gap in 2026. By Isabela Mendes Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.