Camex (Chamber of Foreign Trade) has reduced import tariffs on two types of steel rebars and, in yet another attempt to reduce pressure on inflation, has zeroed the rates on 7 foods, the Ministry of Economy said on Wednesday ( 11).
The list includes boneless beef (until then subject to a tariff of 10.8%), chicken pieces (9%), wheat flour (10.8%), wheat (9%), corn in grains ( 7.2%), cookies and crackers (16.2%) and other bakery and pastry products (16.2%).
The rate reduction goes into effect this Thursday, and will be in effect until December 31. The items will be included among the 100 exceptions to which the country is entitled to unilaterally change tariffs, without the need for discussion with Mercosur.
For this, medicines, LED lamps, aluminum conductor cable and mozzarella cheese, among other items, were excluded from the list.
The government also reduced the import tax on two types of steel rebar (CA50 and CA60) from 10.8% to 4%. On Monday, a member of the government had stated that the rate would be completely zeroed for steel imports, which sent steel companies down on the stock exchange.
Executives from Aço Brasil, which represents the sector, met with the Minister of Economy, Paulo Guedes, to try to convince the government to ignore the demand of the civil construction sector for the reduction of rebar tariffs.
Despite the tariff not having been reduced to zero, the civil construction sector celebrated the cut as an achievement after months of negotiation with the federal government. An estimate by Cbic (Brazilian Chamber of the Construction Industry) points out that steel accounts, in 18 months, for 22% of the increase in the cost of building a four-story block.
The entity that represents the steelmakers was contacted on Wednesday, but did not respond. For Tuesday’s Panel SA column, Aço Brasil CEO Marco Polo de Mello Lopes said the construction industry used distorted data to convince the government that the reduction was necessary.
The government also cut the tariff on two agricultural inputs — sulfuric acid, from 3.5% to zero, and the fungicide mancozeb, from 12.6% to 4%.
The cost of the measure is estimated by the Ministry of Economy at R$ 700 million this year.
According to the executive secretary of the Chamber of Foreign Trade (Camex), Ana Paula Repezza, the reduction for food and agricultural products was made with the aim of curbing the inflationary impulse.
Repezza said that although the rebar tariff cut will eventually have an impact on inflation, the demand in this case was technical and had been under analysis for eight months in the government. According to her, Camex has not received new requests for tariff cuts for other types of steel products.
In the case of products removed from the list, the department’s technicians argued that the decision was taken due to the low flow of imports of these items or because there will be situations with effective tax reduction – in the case of products that had been included in the list to be taxed. above the Common External Tariff (TEC) rate.
In March, Camex had already zeroed the rates for ethanol and six types of food — ground coffee, margarine, cheese, pasta, sugar and soy oil. At the time, the Ministry of Economy also argued that the initiative was part of an effort to contain high inflation.
In an attempt to mitigate pressures on prices, the government adopted other measures in the area. In November, when implementing, without Mercosur support, a 10% rate cut for a group of products that encompasses 87% of the country’s tariff universe, the government said that there was urgency to deal with the rise in prices.
This Wednesday, the IBGE reported that inflation in Brazil reached the highest rate for April in 26 years and surpassed the 12% mark in 12 months, with fuel and food prices putting pressure on consumers’ pockets.
“We know that inflation is a global phenomenon and that we have to reduce the impact on our population,” said the executive secretary of the Ministry of Economy, Marcelo Guaranys.
According to him, the government continues to seek dialogue with Mercosur to make a greater reduction in the TEC.
Civil construction celebrates cut and plans to import
The reduction was already seen as a victory in the segment. José Carlos Martins, president of Cbic (Brazilian Chamber of the Construction Industry), says that importing steel in the sector is complicated due to the amount of protection rules and certifications.
The first requests sent to Planalto date from September 2020, still in the first year of the pandemic, when the real estate development market registered an acceleration in hiring and launches. At the time, the sector’s claim was for zero tax.
With the temporary reduction of the tax, the tendency is that the construction companies resume the purchases. In 2021, Coopercon-PR (Cooperativa da Construção no Paraná) organized the import of 40 thousand tons of steel from Turkey. There were two rounds of purchases that attended about 140 Brazilian developers.
The sector discussed again this year, as anticipated by the Panel SA column, a new quotation with Turkish producers. Construction companies had contracts with distributors and steelmakers with guaranteed prices until April 30 and many had already received tables with prices readjusted by 15%.
This Wednesday, after the announcement, some already reported the collection of tables, a movement seen by the sector as a reaction to the tax reduction.
The president of Cbic says he expects that the improvement in the conditions of purchase in the international market will act as a containment in the rise of prices in the steel mills in Brazil. “If there is no price reduction, at least do not make new adjustments.”
Luiz França, president of the Brazilian Association of Real Estate Developers (Abrainc), says that rebars have accumulated a high of 101% in two years. “The high input had been a major obstacle to the growth of the sector,” he said, in a note.
The construction industry still doesn’t know how much it will cost to bring in steel with a reduced import tax. In the coming days, the cooperative of Paraná should start preparing a new membership period, during which the construction companies inform how much they want to buy.
The second batch of imported rebar was still being shipped through Brazil until December 2021, according to Cbic. After all the clearances, it cost companies 15% less, compared to what would have been paid if the purchase had been made at Brazilian steel mills.
The construction chamber says that after the arrival of imported steel, steelmakers held back prices, which lowered interest and demand for new international purchases.
According to the balance of Aço Brasil, an entity that represents the steel mills, 244 thousand tons of steel were imported in March, a drop of 39.1% compared to the same period last year.
Aço Brasil estimates that the construction, capital goods and vehicles sectors consume around 80% of the steel produced in Brazil. In the works, the main products are long products, which the large construction companies buy directly from the mills.