‘We have a whole green chemistry that we can expand, since the world is interested’

Investments in Brazil's chemical industry should reach 20bn reais (US$3.2bn) by 2030, according to André Cordeiro, president of Brazilian chemical industry association Abiquim. 

These are relatively small volumes, given the challenges of competing with the US and China, which have significantly expanded their capacity by relying on heavy subsidies. 

Cordeiro says Brazil’s federal government needs to include the chemical industry in the new NIB (New Industry Brazil) industrialization program, enabling more investment, including in green chemicals.  

In this interview, he analyzes the challenges facing the market and highlights players with projects under development.

BNamericas: How big is the Brazilian petrochemical industry today? Which are the main hubs?

Cordeiro: In 2022, we were the fourth largest chemical industry in the world. We oscillate between fourth and sixth place in terms of turnover, which is currently around US$160bn a year. 

The main hubs are Camaçari in Bahia, Catuaba and Cubatão in São Paulo and Triunfo in Rio Grande do Sul. 

BNamericas: Who are the main players and what are the projects under development?

Cordeiro: Braskem owns the main petrochemical plants, making the basic chemicals, such as ethylene, benzene propylene, butadiene, toluene... from which everything derives, in general. 

In addition, there are companies like Rhodia, Innova, Unigel, Basf, Elekeiroz, Indorama and Indovinya, which is the former Oxiteno. We have more than 100 members, representing over 90% of the market for industrial use. 

BNamericas: What are the growth and investment projections?

Cordeiro: Around 20bn reais by 2030. Investment has been low due to the global economic situation. China and the US have invested a lot in new capacity, over 20% above world demand. Only those who have access to very cheap raw materials, such as gas, or who have a lot of subsidies, such as the US and China, are investing. Those who don't, such as Brazil and Europe, have low investment rates and are operating with idle production capacity of almost 40%. 

These 20bn reais have a lot to do with ecological transition, modernization of plants for decarbonization. The contributions are a reflection of the stimulus plan that the federal government resumed in 2023, which is the special regime for the chemical industry. Those who invest receive more incentives. This has generated more than 1bn reais in requests. Around 500mn reais have already been approved. So we expect this stimulus to continue, including making it possible to increase capacity. We’re also working on the idea of cheaper gas prices in Brazil. 

BNamericas: The government has asked the ANP to speed up the regulation of the gas release program in order to stimulate the market. What do you think of this?

Cordeiro: Any move to deconcentrate the market is desirable. Conditions need to be created, especially through the free market and by providing new sources of supply. Gas release helps with that. 

We just have to be careful not to impose market concentration requirements. [Brazil’s antitrust authority] Cade regulates this. We're not in favor of setting concentration limits by law, as this impacts various sectors. What level of competition is acceptable? It depends on the market. If it's a global market, sometimes you can have two or three companies in one country, and there may be imports. It's difficult to set a market limit, but we support mechanisms to encourage deconcentration, such as gas release or third-party access to infrastructure. 

There's also the gas for employment [Gás para empregar federal program] and negotiations with Argentina... these are signs that make us anticipate an increase in investment. 

By the way, we have an MOU with Petrobras for a gas marketing model suitable for the petrochemical sector. 

BNamericas: What are the main petrochemical projects in Brazil?

Cordeiro: There are Petrobras' fertilizer plants and Braskem's investment in Duque de Caxias for basic chemicals; some sustainable chemical projects, such as the one in Rio Grande, together with Ultra and Petrobras; Unipar's investments in modernizing its chlorine-soda production plants. Innova and Elekeiroz also have projects. 

Unigel [which leased two fertilizer plants from Petrobras] is talking to Petrobras to try to solve the problem of the natural gas prices. 

BNamericas: What are the main challenges? 

Cordeiro: There’s the challenge of greening production. Braskem and Rhodia are the two biggest users of ethanol for chemical production. Brazil is the largest producer of green ethylene in the world. And Rhodia uses ethanol in Paulínia [São Paulo] for its production of solvents etc. 

So there’s an alcohol-chemical industry in Brazil that needs to be revived and encouraged. It’s capable of producing almost all the chemical products made from oil and gas. A suitable environment is needed, with incentives through RenovaBio or the regulated carbon market. We’re burning alcohol instead of using it to produce goods that we use on a daily basis. 

There are also members of ours who use vegetable oils, such as Indovinya, to produce antioxidants used in agribusiness. We have a whole green chemistry that we can expand, since the world is interested in it. Resins, glues extracted from wood – this can grow a lot and replace products made from fossil raw materials with green ones, with low or no carbon emissions. We're looking at the fuel and energy market, not the industrial market. We need to encourage demand in Brazil for industrial purposes. The chemical industry is one of the biggest consumers of hydrogen in the world, using it for textiles and synthetic fibers, for example. We have to put hydrogen production units on industrial sites to produce from renewable energy sources. 

BNamericas: Most of the hydrogen projects under study in Brazil focus on exporting, right?

Cordeiro: Companies are fighting to make green hydrogen production viable in Brazil, which is commendable. In Europe, demand is being subsidized through large auctions. What risk are we running? Brazil is subsidizing the creation of supply and Europe is subsidizing demand. This is the point we have to tackle. Otherwise, we'll be decarbonizing European industry. This is a strategic decision, to use this energy to produce goods with higher added value. Only industrial policy can reverse this model. 

We've had several moves from the government to provide support, with the REIQ [special regime for the chemical industry]. The previous government tried to eliminate the REIQ. The current government took it over, regulated it and maintained a line of incentives, albeit precarious and limited. The government understood that our sector, like steel, tires, among others, had to be defended from the aggressive and predatory competition of this trade war between China and the US. So it increased import taxes on core products. 

But there’s no direct and obvious connection between this and the NIB. The NIB is under construction, in process. Our request is for the chemical industry to be clearly and explicitly included in the NIB's missions. Because ours is the industry of industries. You don't take any mineral, vegetable or fossil fuel and hand it over to industry without first going through a chemical process, without being transformed by the chemical industry.