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Higher Oil Price Boosts Brazil Imports from Arabs by 69%

Arab oil Brazilian imports from the Arab countries posted significant growth in the first four months of this year. They rose from US$ 1.7 billion between January and April last year to US$ 2.9 billion in the same period this year, expansion of 68.89%.

In April, purchases grew 52% in comparison with the same month last year, from US$ 492.4 million to US$ 801 million.

According to the secretary general at the Arab Brazilian Chamber of Commerce, Michel Alaby, the expansion was mostly due to the rising price of petroleum, a product traditionally supplied to Brazil by the Arabs.

In fact, crude petroleum oils answers to US$ 1.9 billion of the total imported in the first four months. Even though the volume of the product purchased between January and April decreased, the value grew 43.6%.

Other products that had significant influence on imports were fertilizers and inputs for their production. Of the 20 main items bought by Brazil in the Arab market up to April, nine belonged in the sector.

The expansion, explains Alaby, is primarily a consequence of agricultural growth. Tomás Huyer, director of operations at company Intertrade Group, which imports fertilizers, claims that prices have gone up as well.

"Fertilizer prices have been rising a lot since January last year. Therefore, companies tried to purchase the largest possible amount of products as early as they could," he explains.

The aim of these anticipated purchases, according to Huyer, was to avoid an even greater increase in fertilizer prices. According to him, from January onwards, the price of one ton of granulated triple super phosphate (GTSP), for example, went up from US$ 500 (Fob) to US$ 1,000.

The cause, at the end of the chain, is the global rise in food demand. The perspective of higher consumption and better agricultural prices leads farmers to produce more and, as a consequence, explains Huyer, fertilizer purchases and prices increase.

Among the products in the sector that Brazil imported from the Arabs up until April were items such as phosphoric acids, super phosphate, phosphate and urea. Brazilian purchases from the Arabs in the "fertilizer" category grew 207%, from US$ 61 million to US$ 187.7 million. The leading supplier countries were Morocco and Tunisia.

Brazil also increased its purchases of other products in the Arab market, such as sardines and clothing, between January and April. These products, however, have a much smaller weight in the import basket than do mineral fuels – petroleum, naphtha for the petrochemical industry and aviation fuel – and fertilizers. Fuels and fertilizers answered to 93% of Brazilian imports from the Arabs in the first four months of the year.

Exports from Brazil to the countries in the League of Arab States also grew between January and April compared with the first four months in 2007, although at a lower rate. They rose 16.48% to reach US$ 2.3 billion.

The growth rate recorded in April, in comparison with the same month of 2007, was 15.16%. Brazilian foreign sales to the Arabs totaled US$ 622.5 million in the month. The leading product in the basket, from January to April, was meat, followed by sugar, ores, iron, aircraft, capital goods, vehicles and grains.

According to the secretary general at the Arab Brazilian Chamber, agribusiness products answered to 65% of exports during the four-month period. In the same period last year, the rate was 62%.

The expansion rate of foreign sales could have been even greater, according to Alaby, had it not been for the reduction in sugar prices. Up until April, Brazil posted revenues of US$ 373 million from shipments of sugar to the Arabs, as against US$ 499 million in the same months of last year.

In the accumulated result for the year up to April, bilateral trade between Brazil and the region stood at US$ 5.3 billion. The figure represents growth of 40.46% over the first four months of 2007, when trade totaled US$ 3.7 billion.

In the month of April, bilateral trade between Brazil and the 22 League of Arab States member countries stood at US$ 1.3 billion.

Anba

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