🤨 Thou shalt not steel

Happy Friday! Today, a new win for Brazil’s steel industry. Petrobras wants to repurchase a former asset. And CBD hits São Paulo pharmacies.

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Circumventing steel restrictions

The federal government on Thursday announced the extension of antidumping restrictions on steel products coming from China. The move comes after authorities observed an attempt by steel importers to circumvent previous restrictions by purchasing products with slightly lower levels of chromium and nickel “but which are essentially the same product as those under restrictive tariffs,” according to the Trade and Industry Ministry.

By the numbers. Rafaela Noman, Brazil’s trade defense officer, said imports of steel products of this variety were “nearly nonexistent when antidumping measures kicked in, and soared by 500 percent since.”

 Why it matters. Brazilian steel producers claim that dumping practices from China are creating existential threats for Brazilian steel producers. They say the loss of market share to Chinese competitors led to a 40 percent idle capacity, shrinking profits, and several layoffs in recent months.

State of play. China’s economic slowdown has led the Asian giant to look for new markets for its over-abundant steel output, wreaking havoc across Latin America, not just Brazil. In over a decade, the region’s steel imports from China soared by a stunning 11,000 percent.

• Governments in Mexico and Chile have hiked tariffs. Brazil is also moving in that direction.

• In September 2023, it removed 12 steel products from a list that benefited from a 10 percent reduction in import tariffs. Then, in February, the Foreign Trade Chamber reinstated tariffs on five steel products — that Brazil had unilaterally cut in 2022 — two of which had their tariffs further hiked with Tuesday’s decision.

• Ultimately, in April, Brazil raised import levies on 11 different steel products to 25 percent and set import quotas to enforce the new taxes.

A push for re-nationalization

A day after Petrobras announced it was completely dropping its plan to sell multiple refineries to comply with antitrust regulations, reports suggested the company will push to repurchase a refinery in Manaus, the biggest city in the Amazon, that it sold to the private sector in 2022 for USD 257 million. This deal will reportedly be high on the list of priorities for Magda Chambriard, the incoming chief executive.

• In November last year, the state-controlled oil giant had already announced the re-nationalization of a refinery in the northeastern state of Ceará.

 Why it matters. Earlier this year, former CEO Jean Paul Prates said the refinery had “apparently halted operations,” adding that it would be “very difficult for it to operate again.”

Controversy. A union of oil workers filed a lawsuit against Atem, the new owner of the Manaus refinery, sparking a regulatory investigation. The union claims Atem has not disclosed data on refining, citing suspicions that the new owners want to discontinue refining operations and turn the plant into a logistical hub instead.

• One criticism of the privatization of the Manaus refinery was that it would be more profitable for the new owners to stop refining and focus on fuel importation and distribution, as the facility included a shipping terminal.

What they are saying. Petrobras’s push to repurchase assets is criticized by many — whether because it means losing money or because of more structural issues with Brazil’s oil market. For Refina Brasil, an association of private refining companies, the government should be interested in increasing Brazil’s oil processing capacity. The deal to regain control over past assets does nothing in that direction.

CBD oil hitting São Paulo pharmacies

More than a year after the approval of a bill authorizing the public health system (SUS) in São Paulo to provide medicinal cannabis products for free, public pharmacies have begun receiving cannabidiol (CBD) oil. The product is manufactured by Ease Labs Pharma, a company based in the state of Minas Gerais that won the state government’s tender in January. 

 Why it matters. São Paulo will pay BRL 0.04 (less a penny) per milligram of CBD, which is up to six times less than what the state paid after being forced by a court order to supply the product to a family. 

Rules. Access to CBD oil was granted only for patients with a prescription and diagnosis of diseases such as tuberous sclerosis, Lennox-Gastaut syndrome (a type of childhood epilepsy), and Dravet syndrome (a disabling and progressive disease). People suffering from depression or other problems are not included.

State of play. Since 2014, Brazil’s health surveillance agency Anvisa has authorized the import of some medicines made from cannabis plants. In 2019, the pharmaceutical industry’s research, production, and sale of drugs in the country were also allowed, but the plants still need to be brought from abroad.

• To date, more than 158,000 people have been authorized to import medical cannabis. However, with treatments costing between BRL 300 (USD 61) and BRL 2,000 (USD 409) a month, demands are growing for self-growing rights.

• Last year, the Superior Court of Justice, Brazil’s second-highest court, approved patients’ requests for permission to grow cannabis at home with the aim of producing CBD oil for medicinal purposes.

Quick catch-up

Azul and Gol announced a codeshare agreement for domestic routes in Brazil operated by one but not the other. The deal comes amid rumors that Azul is willing to take over Gol — the latter is going through a Chapter 11 bankruptcy protection process.

Mining giant Vale hired consultancy firm Russell Reynolds to help its CEO succession process. Incumbent Eduardo Bartolomeo should stay for the transition to new leadership in 2025; the federal government, a key shareholder, is trying to influence the process.

A 4-3 majority in the Rio de Janeiro State Electoral Court acquitted Governor Claudio Castro, his lieutenant, and the speaker of the state legislature of abuse of economic power. While they acknowledge the use of the state apparatus to boost their re-election chances in 2022, judges said the trio’s illegal moves did not skew the election.

A Supreme Court justice gave ten days for Rio Grande do Sul’s state government and legislature to explain recent changes to loosen the state’s environmental code. In April, authorities greenlit the construction of reservoirs in protection areas, among other things.

A bill authorizing sex offenders to opt for chemical castration as a way to avoid jail time has advanced in the Senate. The bill has been fast-tracked and is part of the Brazilian Congress’s recent penal populism drive.

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