Over 70% of industrial firms struggle to get raw materials

In addition, expensive dollar makes imports more difficult

Published in 09/04/2021 - 13:30 By Danilo Macedo - Brasília

Indústria, - José Paulo Lacerda/CNI/Direitos reservados

Brazil’s scarcity of supplies and raw materials for production has affected 73 percent of companies in the general industry (extraction and manufacturing) and 72 percent of construction firms in February. The figures were published Friday (Apr. 9) by Brazil’s National Confederation Industry (CNI) as part of a study surveying 1,782 companies.

The values are near the previous survey (75 and 72 percent, respectively), carried out in November 2020, leading investors to believe domestic production chains would no longer be normalized in the first half of 2021. Now, 37 percent believe things will go back to normal by the end of June, 42 percent in the second half of year, and 14 percent not until 2022. Approximately six percent expected the normalization to take place in March.

In addition to scarce domestic supplies, companies are also facing difficulties finding imported raw materials, even when they must pay a higher price for products. Of general industry companies that need to import, 65 percent faced this issue—a proportion that reached 79 percent in the construction industry.

According to CNI, current setbacks are still the result of uncertainties that the economy experienced during the first wave of the COVID-19 pandemic, in 2020, when a large number of companies called off the order of supplies. “The quick resumption in the economy in the second quarter of 2020 cannot be followed at the same pace by all companies, which brought about difficulties at several links on the chain,” the entity reported.

Expensive dollar

The depreciation of the Brazilian real against the dollar, CNI argues, in addition to raising import costs, makes the export of Brazilian raw materials more attractive, leading domestic suppliers to redirect a portion of what was sold domestically to the international market.

As a result of the scarcity of provisions, many companies also declared in the study they are having a hard time serving customers. In the construction industry, the problem affects 30 percent of them, compared to 45 percent in the general industry. In computing and electronic and optic devices the lack of supplies reached 69 percent of firms in February.

Also in the CNI study, among the sectors with most difficulties meeting customers’ demands are: metallurgy, auto vehicles, machinery and equipment, furniture, textiles, cellulose and paper, wood, machines and electrical materials, metal goods, and plastic material.

Translation: Fabrício Ferreira -  Edition: Kleber Sampaio / Nira Foster

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