The Brazilian polyvinyl chloride (PVC) market is eagerly awaiting new policies to be announced by the government of president-elect Luiz Inacio Lula da Silva in the infrastructure and construction sectors, expecting improved business conditions along the supply chain.
Brazil is Latin America's largest producer and consumer of plastic resin, including PVC, but has suffered from repressed demand and a lack of investment in PVC-buying sectors.
The government of President Jair Bolsonaro announced in December 2021 a $100bn infrastructure investment proposal aimed at economic growth, but it has made little progress since.
"We've already heard news that the new government wants to review some points, mainly the part that guides the private sector's entry into the sanitation framework," an executive from one of the largest manufacturers of PVC pipes in Latin America told Argus. "The market expects better conditions for an increase in production throughout the PVC chain."
Another issue is the dependence on domestic PVC, where giants Braskem and Unipar Carbocloro control the market.
"We saw during this year that the demand for PVC was very weak," the PVC pipemaker continued. "For next year, we expect that here in Brazil the government will make some changes in relation to the flexibility of imports."
Some market participants are hopeful that given the current environment of elevated inflation and interest rates, the new government will not increase antidumping restrictions for resin produced in the US and not reestablish higher import taxes for resin from the US and elsewhere.
Brazil cut anti-dumping duties on US-produced resin to 8.2pc at the end of September from 16pc, which had been in effect since 1992.
All this comes after a year where resin prices in Brazil and most of the world fell to pre-pandemic levels, falling to around $600-700/t from around $2,000/t at the start of 2022.
According to one source, 2022 was "chaos", which is giving way to uncertainty in 2023.
