Highly reliant on their domestic market, this flood of cheap imports driven by global oversupply has left Brazilian producers unable to compete effectively and struggling to adapt quickly. Passos Cordeiro summarized the the ‘Brazil Cost’: “High electricity prices, inefficient logistics, bureaucracy, and, most notably, the price of natural gas.”

Fábio Lopes de Azevedo, executive manager of business integration and partnership at Petrobras, Brazil’s state oil and gas giant, affirmed that competitiveness over imports was the major challenge facing the country’s chemical industry today, as it tackles oversupply and squeezed margins.

Various aspects of the ‘Brazil Cost’ were echoed across GBR’s interviews with Brazilian stakeholders. Some suggested that far-reaching reforms are required in Brazil to cut costs and reinvigorate the industry. “High taxation, particularly interstate tax discrepancies, puts domestic producers at a disadvantage in Brazil,” asserted Daniela Manique, CEO Latin America at chemical producer Solvay.

An imported product may face just 4% interstate tax when sold into São Paulo, where the same item produced locally could be subject to an 18% levy. Marcus Barranjard, general manager of São Paulo-based distributor Bandeirante Brazmo, argued that Brazil’s high energy and natural gas costs meant that even more profound changes would be necessary: “Tariff increases alone will not solve this; structural reforms to reduce costs are essential,” he said.

Times can be tough: Braskem, Latin America’s largest petrochemical company and the world’s 8th largest resin producer, reported: “Braskem has been impacted by the reduction in margins between resin prices and naphtha costs, reducing our competitiveness,” lamented Stefan Lepecki, VP of the company’s South American business, and went further, contending: “Cheap imports are sold often at prices below cost, compromising fair competition.”

In an effort to diversify its feedstock supply, Braskem is expanding the ethane processing capacity at its plant in Duque de Caxias, RJ, in a joint project with its part-owner, Petrobras. This investment forms part of a wider R$33 billion package announced by Petrobras in July 2025, with Braskem contributing R$4 billion. Luiz Inácio Lula da Silva, Brazil’s president, hailed the investment: “Petrobras is a kind of compass for the Brazilian economy. If Petrobras does well, Brazil does well.”

This is an indicator of Brazil’s government’s hope for a way out of the country’s chemical sector crisis. Petrobras has outlined US$111 billion in project investments from 2025 to 2029, also including what Lopes de Azevedo labelled a “strategic return to the ethanol market, recognizing its growing importance in Brazil and globally, driven by ethanol’s long-term growth potential and its relevance to the Brazilian energy transition.”

Though Petrobras’ scale makes its investments stand out, it is not alone. Unipar, a producer of caustic soda, chlorine and PVC, is investing US$200 million in the modernization and conversion of its Cubatão, SP chlorine facility to 100% membrane technology. In addition to what CEO Rodrigo Cannaval called the “significant sustainability and competitiveness gains” to be delivered by the upgrade, he said the investment would position Cubatão as “South America’s largest and most modern chlorine production hub, aligned with long-term growth.” Unipar has also recently expanded production at its Santo André, SP, PVC plant, and inaugurated a new, greenfield sanitation products factory in Camaçari, BA, in April 2025.

Other segments of the Brazilian chemical industry are also demonstrating optimism. Kemira is seeing growth in its South American operations on the back of a regional pulp and paper production expansion, experiencing double-digit growth on the continent, opening up opportunities to expand capacity. “Modern pulp mills require substantial volumes of chemicals, often justifying the construction of new chemical plants,” commented Paulo Barbosa, a sales director for Kemira.

Agricultural chemicals, in which Brazil leads the world in consumption, are another growth market. FMC’s Brazil president, Renato Guimarães, welcomed the company’s “most robust innovation cycle in 140 years,” casting persistent inventiveness as part of a solution to the competitiveness problem: “Innovation is essential to control rising costs, as post-patent generics lose efficiency and demand higher doses.”

Brazil retains the fundamentals for a vast, diverse chemical industry, with scale, resources, and innovation combining into real strength. Yet in 2025 it struggles to compete in a harsh downcycle. Though pressures are largely external, the priority is dismantling the ‘Brazil Cost’ to build a leaner, more competitive sector capable of harnessing its undeniable advantages.

In November 2025, Brazil will host COP30 in Belém, drawing over 40,000 participants, including heads of state and business leaders. Though organizational challenges have caused pre-event concerns, the event’s location near the Amazon sets the stage for a pivotal moment to shift the global conversation from climate prevention to adaptation. Unlike recent hosts Azerbaijan and the UAE – for better or worse, unapologetic petrostates – Brazil presents itself as a transition leader, with an energy matrix dominated by renewables such as hydropower, wind, solar and pioneering ethanol biofuels. This foundation gives its industries a natural carbon advantage and deep experience developing bio-based products.

Solvay’s Daniela Manique, who also leads the Sustainable Business COP30’s energy transition group, put it so: “COP30 will be a key opportunity to showcase Brazil’s industrial achievements in sustainability. While we receive global project submissions, the scale and innovation in Brazil stand out and I believe they deserve far greater recognition on the world stage.”

Among those achievements is Brazil’s growing strength supplying a variety of ‘green’ products. Guy Bessant, president of Stolthaven Terminals, which has focused its Brazilian specialty liquid logistics business on bioenergy products in recent years, explained the company’s green pivot: “Bioenergy-linked chemistry is expanding, while basic chemicals see minimal growth. Companies such as Braskem, Raízen and Impasa are developing green polymers, ethanol and ammonia, with European firms seeking green feedstocks for energy transition.”

Stolthaven is considering the development of a second terminal in Pecém, CE to handle up to 2.5 million t/y of green ammonia. Bessant added “Brazil’s tropical northeast offers unique conditions for low-cost green ammonia production.”

Elsewhere, Topsoe is contributing its chemical processing and catalyst expertise to Petrobras’ Riograndense refinery project, set to be one of Brazil’s first commercial scale sustainable aviation fuels (SAF) plants. “Brazil is a leading force in this wave of renewable projects, and particularly for SAF thanks to its abundant feedstock and supportive legislation,” said Gustavo Cienfuegos, Topsoe’s managing director for Latin America, calling Riograndense a “flagship” project for the company’s Latin American operations.

Petrobras’ Lopes de Azevedo commented: “Petrobras has been studying and investing in R&D and industrial testing to use renewable feedstocks in our industrial assets producing chemicals with renewable content.”

He presented Riograndense as one successful example and contrasted the chemical industry’s short-term challenge – competing with oversupplied imports – with the medium-to-long term one of implementing an effective and integrated transition to a low-carbon economy, while also meeting the economic and social needs of the population.

The Brazilian government is not sitting idly by. Though its Special Regime for the Chemical Industry (Reiq), offering tax incentives, is set to expire in 2027, its proposed successor, the Special Program for Chemical Industry Sustainability (Presiq), targets stimulus measures specifically at projects advancing sustainability goals. “Presiq stands out as an effective tool for addressing climate change. It promotes innovation, the use of renewable raw materials such as biomass and natural gas, green financing, and energy efficiency,” argued Abiquim’s Passos Cordeiro.

Francisco Fortunato, CEO of the diversified chemical producer Grupo OCQ, spoke to the importance of the Reiq in the current chemical sector context: “The Reiq supports major investments amid intense international competition, particularly from China... It provides essential relief, making projects more projects financially viable and encouraging local investment.”

Others argue it has not gone far enough to sufficiently boost industrial development. Stolthaven’s Bessant contended: “A lack of strong industrial policy has led to limited new investment in production facilities” in Brazil.

Brazil’s chemical sector remains focused on leveraging its green advantages and expertise. Success, however, is not guaranteed, requiring sustained commitment from both government and industry to address challenges across multiple fronts.