Brazil’s PE market assumes ADDs on US, Canada material to be imposed from June

SAO PAULO (ICIS)–Brazil’s polyethylene (PE) sellers this week are encouraging customers to bring forward purchases on the assumption that the government is to impose antidumping duties (ADDs) on US and Canadian material from June.

– Braskem’s PE ADDs proposal could be approved this week
– Sources said prices are increasing ahead of measure
– ADDs on PVC still being analyzed by government

According to several sources, the ADDs on US and Canada PE could be approved by the government’s body for foreign trade, the Foreign Trade Chamber (Gecex), at a meeting to take place on 29 May.

Gecex’s investigation into possible PE dumping by the US and Canada into Brazil started in November after local polymers major Braskem filed the proposal arguing unfair competition.

ADDs are tariffs imposed on imported goods that are sold at prices lower than their normal value, potentially harming domestic producers, and are widely used as a protectionist measure from unfair competition.

Brazilian PE sellers are this week encouraging their customers to bring purchases forward, warning them that the ADDs could potentially be effective from as soon as 2 June.

While this could be seen as a strategy by sellers to prop up their sales, the assumption that the ADDs on US and Canada’s PE will be imposed is not senseless, given that it would follow a series of protectionist measures implemented by the government of Luiz Inacio Lula da Silva in the past two years.

ICIS put to Gecex the markets’ assumptions about an almost certain green light for the ADDs, but in a written response it said it would not comment.

“We cannot make any comments or provide information regarding the progress of the investigation. Likewise, we cannot make any inferences regarding market information provided by third parties,” said Gecex.

These ADDs would be provisional, while Gecex would have up to 18 months to decide whether they will become permanent. If PE dumping from the US and Canada could not be proved in the end, the measure would cease to exist. If proved, the measure could become permanent until further notice.

NOT RESPONSIBLE FOR HIGHER COSTS
In two letters to customers seen by ICIS, two distribution companies warned about the ADDs, with one of them taking for granted they will be imposed and be effective in June.

Global chemicals distributor Vinmar’s Brazil subsidiary warned their customers that any potential “financial loss” from the potential ADDs would not be assumed by the distributor but by the customer.

“We are on the verge of the potential entry into force of ADDs on PE imported from the US and Canada. We would like to emphasize that Vinmar, as always, cannot be held responsible for any financial loss of the importer if any import tariffs are implemented or adjusted during the logistic process of delivering the cargo to its recipient,” said Vinmar in the letter.

“The cargo cannot be canceled or undergo any adjustment of price/commercial condition as a form of compensation, even if the cargo has not complied with the maximum agreed shipping deadline.”

To cover its back entirely, Vinmar concluded the letter clarifying to its customers that “logistic process of delivering the cargo” means from beginning to end: since the containers are loaded, in this case in the US or Canada, until delivery at the port of destination in Brazil.

Vinmar had not responded to a request for further comment at the time of writing.

Another distributor’s letter to customers said: “As of June 2025, the ADDs will come into effect, which will directly impact costs of PE materials. In addition, Braskem announced a price adjustment for June, which should result in increases in the cost of materials.”

Braskem had not responded to a request for comment at the time of writing.

A source at a distributor said on Monday, however, that these warnings about potential price increases outside a company’s control are common in the chemicals sector.

Consequently, the source said its company had been including in contracts with its customers a clause from the beginning of 2025 highlighting the Gecex investigation, so it can cover its back on the potential higher costs emanating from the ADDs.

Meanwhile, Gecex continues investigating another proposal for ADDs on polyvinyl chloride (PVC) brought forward by Braskem and Brazilian caustic soda and chlorine derivatives produce Unipar, also arguing unfair competition.

Management at Braskem has publicly stated they were lobbying the government for this measure to be approved, since PVC is one of the plastics which is suffering the most the global oversupply and the consequent low prices.

Gecex is currently working on the “preparation of the final report” for those ADDs on PVC, according to information on its website as of Monday.

Gecex also started in April an investigation into potential polyethylene terephthalate (PET) dumping in material coming from Malaysia and Vietnam, a proposal brought forward by Indorama and Alpek.

MORE PROTECTIONISM
If approved, the ADDs on PE from the US and Canada would add to a list of protectionist measures implemented by the Brazilian government of Luiz Inacio Lula da Silva in the past two years, such higher import tariffs for dozens of chemicals from October 2024.

Meanwhile, the Brazilian government re-imposed ADDs on US-origin PP and has approved programs contemplating state subsidies or credit lines at favorable rates for chemicals companies, such as Presiq.

Brazil’s chemicals producers – represented by trade group Abiquim and including names such as Braskem, Unipar, and Unigel – have been lobbying for protectionist measures against what they see as unfair competition from overseas markets such as the US and China.

Aided by lower production costs, companies in those two countries, but also others such as Canada or nations in the Middle East, are blamed by Brazil’s domestic producers for their historically low operating rates, hovering around 60-65%, and the closure of some plants which were not competitive.

In an interview with ICIS earlier in May, the director general at Abiquim said the continuation of protectionist measures was key for Brazilian chemicals producers to stay afloat.

“Nothing has fundamentally changed in our situation in the past few months. The scenario remains the same, perhaps even worsening with [US President Donald] Trump’s trade measures, and we continue suffering with low capacity utilization rates,” said Andre Passos.

“Brazil’s chemical production has been on a downward trajectory since 2016. Capacity utilization level of our plants [has gone] from above 80% before 2016 to around 60% now.”

However, importers of polymers and other petrochemicals are understandably on the opposite side of the debate. They argue measures such as high import tariffs or ADDs negatively affect manufacturers who are dependent on chemicals imports and increase inflation, affecting consumers’ purchasing power.

Around half of Brazil’s chemicals demand is covered by imports, given the country’s trade deficit in chemicals, a common feature in the wider Latin America.

Trade group Abiplast, representing plastic transformers, has repeatedly showed opposition to protectionist measures which increase costs for importers.

Front page picture: Port of Santos in Sao Paulo, Latin America’s largest
Source: Port of Santos Authority

Additional reporting by Bruno Menini

Focus article by Jonathan Lopez