São Paulo – Brazilian exports to the Arab world generated US$ 6.41 billion in the first half of the year, growth of 33% over the same period in 2010, according to figures disclosed by the Ministry of Development, Industry and Foreign Trade and compiled by the Arab Brazilian Chamber of Commerce. The figures do not include Libya, a conflagrated country.
The main products exported were meats, sugar, ores, grain, vegetable oil, capital goods, aircraft, seeds and oleaginous grains and products like iron and steel. There was expansion in sales of all these items, with highlight to iron ore, wheat and soy oil.
In the case of foods, the CEO at the Arab Brazilian Chamber, Michel Alaby, pointed out the efforts of the several countries in the region to establish regulating stocks, as their production is insufficient. The proximity with the Muslim month of Ramadan, in which the Muslims fast during the day and feast at night, is also pressing demand.
“The establishment of stocks is taking place in an attempt to control inflation,” said Alaby. The greater prices are among the main economic concerns in the Arab world and served as a catalyst to the protests lived in the region this year.
One item attracted the main attention in the first half: wheat. This is because Brazil is not a traditional exporter of the commodity. On the contrary, domestic production is not enough to supply demand.
However, conditions in the national and international market in the first half of this year allowed for the export of great volumes. According to the president of the Federation of Agricultural Cooperatives of Rio Grande do Sul, Rui Polidoro Pinto, the wheat produced in the last crop is not the most appropriate for the bread industry in Brazil.
There was, therefore, a surplus that could be exported. “Production was also very high, above average,” said Polidoro. The three states of the South (Rio Grande do Sul, Santa Catarina and Paraná) concentrate wheat culture in Brazil.
This wheat may, however, may be used in the production of pasta and biscuits, in the production of animal feed and also to make bread that does not need to rise, like pita bread.
Polidoro added that there has been government aid to transport the surplus from warehouses to ports, making space available for the soy crop, and that the price on the domestic market was not very attractive as, due to the depreciated dollar, the price of imported wheat was more competitive.
There was also, according to the executive, a problem in the crops of Russia, the United States, Europe and Australia, which pressed the international demand and benefited Brazilian producers.
As several factors were necessary for Brazil to export a considerable volume of wheat, it is not possible to say whether they will be repeated. Polidoro informed, however, that international stocks are still below the traditional average. Therefore, there is demand. "It is not possible to say whether [the picture for the first half] will be repeated, but if it is possible, producers will export,” he said.
Ores
With regard to iron ore, economist Luciano Borges, a consultant at the Brazilian Mining Institute (Ibram), said that demand is heated in the Middle East. In the countries of the Gulf, cheap energy supplied by gas guarantees low cost in production of pellets from imported powder. Powder is less noble mining material that needs to be transformed into pellets for smelting. Apart from that, the region invested in the steel industry in recent years to make use of available energy.
The economist recalled that exports to these countries supply other regions. In Oman, for example, the Brazilian Vale has an industrial and port complex for this purpose.
But it was not just to Gulf countries – especially Saudi Arabia – that sales grew. Ore occupied the first place in the list of Brazilian exports to Egypt. “There was growth of domestic consumption in Egypt despite the crisis,” said Borges, referring to the protests that resulted in the ousting of dictator Hosni Mubarak. He pointed out that trade agents seeking the product for the Egyptian market are very active in Brazil.
Michel Alaby added that, with the political crisis, there had been paralysis in Egyptian industry, which has now returned to activity. According to him, there is demand for steel in sectors that are strong in the country, like civil construction and the automotive sector.
Borges also said that some Arab countries bought iron ore from India, which is now restricting exports, causing an impact on the international market. "They are seeking other sources of ores,” he said.
Read more about trade between Brazil and the Arab world on Thursday (14).
