News from Brazil

Brazil Business & Economy News

In Brazil on March 16, 2012 at 11:50 am

ECONOMY

Brazil’s central bank will likely have to raise interest rates back to double-digit levels by the end of next year to curb inflationary pressures, a weekly central bank survey with market analysts showed (Reuters).

Read the Reuters profile of Guido Mantega, Brazil’s Finance Minister.

Brazil is considering a greater role for state development bank BNDES as the government works to reverse an investment rate that declined in 2011, the bank’s president said (Reuters).

Brazil extended a 6 percent tax on foreign loans and bonds issued abroad by local companies to include lending with a duration as long as five years (Bloomberg).

Brazil’s real declined to the weakest level in two months after the government extended a tax on foreign loans and bonds by local companies to curb the currency’s gains and Chinese exports grew at a slower pace than forecast, damping global growth optimism (Bloomberg).

Jim O’Neill, chairman of Goldman Sachs Asset Management, lent his support to Brazilian policy makers’ efforts to weaken the real, saying it needs to decline 20 percent to keep Latin America’s biggest economy competitive Bloomberg).

The Brazilian “model” faces its first serious test. The European Union and China are Brazil’s two biggest foreign markets. Together, they account for 40 per cent of exports. Now they are slowing. This reduces demand for the real goods that Brazil exports. At the same time, there is an increasing international supply of nominal assets: these are the inflows of global financial liquidity that have caused the real to rise (Beyond Brics – FT).

Between December and January, the regional indexes of the industrial production fell in nine of the 14 places surveyed. Pará (-13.4%) and Paraná (-11.5%) presented the most significant drops this month, the former eliminating the 4.9% increase registered in December, and the latter reversing three months of positive rates which had accumulated gains of 15.3%. Rio de Janeiro (-5,9%) and Ceará (-3,1%) also recorded drops above the national average (-2,1%). The other negative rates were seen in the following places: São Paulo (-1.7%), Santa Catarina (-1.6%), Minas Gerais (-1.3%), Pernambuco (-1.0%) and Espírito Santo (-0.4%). Conversely, Bahia (12.6%), which eliminated the loss of 11.4% accumulated in the months of December and November, the Northeast region, Goiás (3.3%), Rio Grande do Sul (0.5%) and Amazonas (0.1%) registered positive rates in January 2012 (IBGE).

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BUSINESS

Brazilian meatpacker Marfrig and logistics company JSL could not agree on the final terms of an accord to hand over the management of the meat processor’s transportation and storage operations (Reuters).

Former Brazilian central banker Henrique Meirelles aims to help turn the personal care and cleaning products unit of J&F Participacoes SA, which controls the world’s biggest beef producer, into Brazil’s Unilever. Flora, as the Sao Paulo-based unit is known, will be able to seize opportunities in Brazil faster than international competitors because its headquarters are in the country, “unlike large multinationals that have a more tortuous decision-making structure,” Meirelles, 66, said in an interview at Bloomberg’s Sao Paulo office.

Online commerce in Brazil grossed more than $11 billion last year, up 26 percent over the previous year, the market research firm e-bit said (AFP).

AGRI ETC

Shipments of sugar should flow smoothly from top producer Brazil this year with long-range weather forecasts pointing to a dry winter, cutting the risk of a repeat of the disruption two seasons ago that sent prices of the sweetener soaring. The opening of an additional bulk-loading terminal at key sugar port Santos and the deepening of canals there and at Paranagua are additional assurance that long and costly delays for loading are improbable, shippers and forecasters said (Reuters).

But the number of ships waiting to load sugar doubled at Brazil’s ports in the last week as giant trading house Cargill takes delivery on a large March ICE Futures contract expiry (Reuters).

Brazil’s JBS SA, the world’s biggest beef processor, raised its stake in affiliate Pilgrim’s Pride Corp by $107.2 million, strengthening its bet on a United States chicken market struggling with rising feed costs (Reuters).

Brazil may overtake the U.S. as the world’s largest consumer of the bean in two to three years, according to Marcos Pinta Gama, Brazil’s permanent representative to international organizations in London (Bloomberg).

Brazilian sugar-cane companies will spend as much as 6 billion reais ($3.4 billion) this year to renew aging plantations as the nation seeks to boost supply of ethanol (Bloomberg).

Vinema Multióleos Vegetais, an agribusiness company from Rio Grande do Sul in the South of Brazil, is pioneering a groundbreaking project which uses byproducts from the rice industry to produce bio-fuel and ethanol products. The idea is to use rice grains which have been graded unfit for human consumption – those which are deemed stained, chalky or broken – and turn them into ethanol, thereby creating an alternative fuel source for the region (The Rio Times).

AUTOMOTIVE

BMW threatened to pull the plug on its plans to build a new assembly plant in Brazil if new government policies created the conditions under which it could not profitably make cars (Reuters).

AVIATION

Gol Linhas Aereas hopes to receive authorization to start flights to Miami via Venezuelan capital Caracas by mid-year but has no plans to join any global aviation alliance after the route opens, its president said (Reuters).

Traffic at airports operated by BAA rose by 2.5 percent in February, compared with the same period the previous year, with London’s Heathrow benefiting from a surge in demand for flights to Brazil (Reuters).

BANKING & FINANCE

Interbank, Peru’s fourth-largest lender by assets, opened an office in Brazil to take advantage of an expected surge in trade and investment ties between the South American nations (Reuters).

BNDES and the Banco Internacional Del Perú S.A.A. (Interbank) signed a financing contract for Brazilian exports of machinery and equipment to Peru. Funding will be made through the support modality called BNDES Exim Automatic, under the BNDES’ Exim Post-Shipment line (BNDES).

Brazil is evaluating measures to discourage the purchase of short-term securities known as interbank certificates of deposit (CDBs) in favor of lending with longer maturities (Reuters).

Goldman Sachs Group Inc named veteran economist Paulo Leme as chairman of its Brazil unit (Reuters).

Fitch Ratings believes that a partial or full default of Celpa’s and Grupo Rede’s debt should have a mild impact on the Brazilian financial system as banks’ exposure to Grupo Rede’s companies is well dispersed and relatively low (Reuters).

Banco do Brasil plans to quintuple its real estate loan portfolio by 2014 in a bid to become the nation’s second-largest provider of real-estate credit, a director at the bank told Reuters.

ENERGY

Brazil, which has a single utility- scale solar plant, will issue within two weeks a pair of regulations designed to promote the use of power generated from sunshine, the country’s electricity regulator Agencia Nacional de Energia Eletrica said (Bloomberg).

MINING & STEEL

Vale said the Supreme Court of Justice had suspended an order for it to pay billions to Brazilian tax authorities in a double-taxation dispute over its international operations (Reuters).

Norwegian aluminum group Norsk Hydro has delayed the construction of its planned CAP alumina refinery in Barcarena in Brazil due to concerns about the short- and medium-term demand (Reuters).

OIL & GAS

Brazilian energy company HRT Participacoes found gas in a well drilled in the Amazon’s Solimoes basin, which confirmed the presence of large reserves in the same area (Reuters).

Chevron could win back its suspended offshore oil drilling rights in Brazil “within months” if it can convince the country’s oil regulator that it understands why a November spill happened, Magda Chambriard, the regulator’s chief, told Reuters.

Chevron filed to temporarily halt production operations in Brazil after it detected a “small new seep” of oil in the same offshore field where it suffered a high-profile leak in November (Reuters).

Brazil’s state-run oil company Petrobras will have to make up for a shortfall in local refining capacity by importing ever larger amounts of diesel and gasoline, while new refining capacity suffers delays (Reuters).

BG Group Plc should consider selling part of its interest in Brazilian oil fields within 18 months to secure funding for projects worldwide and minimize one-county exposure risk, Nomura Holdings Inc. said (Bloomberg).

SHIPBUILDING

Brazilian shipbuilding and leasing company OSX said it sold $500 million of bonds on international markets to finance the construction of an offshore oil production ship (Reuters).

Oil rig company Sete Brasil expects up to $13.2 billion in loans from state development bank BNDES to build as many as 28 deep-sea platforms for Petrobras (Reuters).

Brazilian logistics operator Wilson Sons has signed a contract with state-controlled oil company Petrobras to build four platform supply vessels (Reuters)

OSX, which is building the Southern Hemisphere’s largest shipyard, said it won a $732 million contract to build 11 oil and fuels tankers for the Brazil unit of London-based Kingfish Trading (Reuters).

Sembcorp Marine Ltd., the Singapore-based oil services company, is building its first shipyard in Brazil to protect market share as state-controlled Petroleo Brasileiro SA awards more contracts to local suppliers (Bloomberg).

TELECOMS

Fees charged by Brazil’s mobile carriers may drop almost 80 percent through 2018 as the country’s regulator seeks to catch up with other nations’ moves to cut prices and boost competition in the industry (Bloomberg).

India and Brazil might still be in the early phase of smartphone revolution but situation is going to be a lot different in the next four years. According to the latest smartphone forecast from research company International Data Corporation (IDC), both the countries will enter the top 5 country markets for smartphone shipments by the year 2016 (NDTV).

 

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