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Chemical Distribution - A Market on the Rise
In spite of such factors as the appreciation of the dollar
and the weak demand for the first half of 2012, the indus-
try is still expected to bounce back and grow this year.
The Federal Senate has passed the amendment put
forward by the Commission on Economic Affairs (CAE)
to Senate Resolution Bill no. 72, of 2010, which sets the
interstate ICMS (Tax on Goods and Services) payable on
imports at the uniform rate of 4 percent, effective as of
January 1st, 2013. Will this measure put an end to the
“war among ports” or “tax wars”? What will it actually
mean to chemical distributors?
Some distributors believe that this piece of legislation
will actually affect the entire market, causing losses to all
players alike, although the possibility that ICMS credits
may be accrued can be taken for a real fact as a result.
Others say that it will benefit the whole industry by miti-
gating the tax war that does exist and distorts the regular
process selling goods from one state to another.
Most of the companies heard for this article, the change
will not lead to any fall in importation or investment, and
is considered positive from the distribution standpoint.
Distributors will seek to get their strategies more and
more in line with those of their suppliers and strengthen
the distribution market through responsible care, trace-
ability and sustainability in business. Another factor is
that competition is expected to become fairer. Today, many
independent importers take advantage of the taxes paid by
businesses that are headquartered in São Paulo, especially,
and whose suppliers are based that state, too. The market
will see a decrease in the number of spot importers, which
hurt the distribution concept in that they have no conti-
nuity strategy and no responsibility for the market served.
While distribution accounts for 20 percent of the sales of
chemical companies, it represents approximately 11 per-
cent in Brazil. This means that there will still be room for
the chemical distribution business to grow.
Over the past few years, many chemical importers and
distributors have migrated to states that provide assumed
ICMS credit benefits aiming at greater competitiveness
for their products, thereby favoring producers with more
competitive prices. A possible prognosis is that companies
which import goods through those states will lose those
benefits, and that will certainly influence end prices. Ho-
wever, it is too early to tell what the actual impact will be
on the chemical market. In the course of the second half of
this year, a list will be published of Brazilian-made equi-
valents of imports, and only then it will be known which