25/06/26
Presiq may boost Brazil's petchems sector
Sao Paulo, 26 June (Argus) — Brazil's proposed special sustainability program
for the chemical industry (Presiq), under review in the lower house, marks a
strategic shift in the country's industrial policy for the chemical and
petrochemical sectors. With the expiration of the special regime for the
chemical industry (Reiq) set for 2027, Presiq emerges as a more modern
alternative aligned with sustainability and innovation goals. Reiq is a fiscal
incentive mechanism that reduces VAT-like PIS/Pasep and Cofins federal taxes on
feedstocks used in chemical and petrochemical production, immediately lowering
operational costs for qualifying companies. In contrast, Presiq is a broader
industrial policy framework still under discussion, intended to succeed Reiq
with a more strategic focus. Unlike Reiq, which focused primarily on tax relief,
Presiq introduces a model based on environmental and technological commitments.
The concept is straightforward: companies in the sector can access benefits if
they allocate part of their resources to sustainable investment such as plant
modernization, energy efficiency, emissions reduction and waste management. In
addition to maintaining Reiq's tax reductions, Presiq aims to unlock further
benefits such as additional tax credits for capacity expansions, access to
public financing for innovation and sustainability projects and regulatory
support for initiatives aligned with Brazil's reindustrialization and green
chemistry priorities. This approach aims not only to revitalize the industry but
also to reposition it within a global context that increasingly demands
environmental responsibility. Brazil's chemical industry currently operates at
around 60pc of its installed capacity, the lowest level since the 1990s. A lack
of investment, outdated technology and competition from imports have eroded the
sector's competitiveness. Analysts consider Presiq to be a critical tool to
reverse this trend. By encouraging modernization and innovation, the program
could unlock a new growth cycle, with gains in productivity, sustainability and
value creation. Braskem, the country's largest petrochemical company, has
expressed support for the program and announced investments in its Rio de
Janeiro facility. The company plans to replace naphtha — its traditional and
costly feedstock — with ethane derived from Brazil's pre-salt gas reserves,
which is both cheaper and cleaner. This strategic shift, expected to be
supported by Presiq funds, represents a move toward cleaner and more competitive
production. Braskem's new leadership under chief executive Roberto Ramos signals
a broader restructuring effort. The company aims to recover market value and
become more attractive for a potential sale, while maintaining controlling
company Novonor, formerly known as Odebrecht, as a shareholder. Diversifying
feedstock sources, including importing gas from Argentina's Vaca Muerta shale
formation, is part of a strategy to reduce costs and improve efficiency. Presiq
also complements recent government efforts to protect the domestic market.
Import tariffs on certain chemical products have been raised to 20pc from 12.6pc
and anti-dumping duties on US-origin PVC have jumped to 43.7pc from 8.2pc. While
these measures aim to curb foreign competition and support local producers,
Brazil's domestic output still falls short of meeting demand. As a result,
imports are likely to continue, albeit from alternative sources such as Egypt,
Argentina and Colombia. Despite a challenging global environment, marked by
overcapacity and lower prices, Brazil's polymers market shows signs of
resilience. Domestic demand continues to grow, albeit modestly, suggesting
underlying strength in the sector and the broader economy. Without macroeconomic
constraints such as high interest rates — currently at 15pc in Brazil —
consumption could be even stronger. In this context, Presiq stands out as a key
catalyst. If successfully implemented, the program could stimulate investment in
new production capacity, making it more modern, cleaner and better managed.
While no vote date for the Presiq bill has been scheduled, it could advance
without a full floor vote unless formally challenged, positioning it as a key
step toward a more strategic and sustainability-driven industrial policy. By
Fred Fernandes Send comments and request more information at
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