Brazilian Paint & Coatings Slip 4% in 2022

Brazil’s paint and coatings industry produced 1,647 billion liters of product in 2022, down 4% from the total of 1,715 billion liters in 2021, the industry’s peak production year to date, according to recent statistics from the Associação Brasileira dos Fabricantes de Tintas, the national paint and coatings manufacturers association, based in Sao Paulo.

The 2022 production places Brazil among the world’s top five paint and coatings producers. While there are several hundred producers of small, medium and large size, the 10 largest producers dominate the market with a 75% share, Abrafati notes. Brazil is the largest market in Latin America for paint and coatings.

While production volumes were down, the Brazilian balance of trade in paints and coatings is healthy: $240 million of products were exported in 2022, compared with $197 million in imports, Abrafati indicates.

An overwhelming 82.5% of the annual production goes into architectural paints and coatings, followed by 11.2% for industrial paints and coatings, including white goods, transportation and auto parts. A total of 4.3% of the 2022 production was for after-market automotive painting, and 2.0% was for the OEM automotive industry.

Of all the segments for which Abrafati reports, the after-market automotive painting industry saw any expansion, to 71 million liters in 2022 from 70 million in 2021.

Brazil’s GDP Rises 2.9% in 2022

Brazil’s economy expanded by 2.9% in 2022, according to a February report by the central bank. The forecast for gross domestic product expansion at the beginning of 2022 was only 0.3%. During 2021, Brazil’s GDP expanded by 5%. Still, forecasts for 2023 growth, including the International Monetary Fund, are for 1.2% expansion, with economic warming continuing in 2024 at a 1.5% rate.

Inflation in Brazil is declining, which will aid GDP expansion. Inflation in 2021 was pegged at 10.1% by the IMF, compared with 5.8% inflation in 2022, the IMF reports. This year, inflation will slow to 5.7% and in 2024, it could drop to 3.5%, the IMF reckons.

One drag on the economy is the high interest rate of 13.75%, in place since September 2022. ““The intention of Brazil’s government to increase spending will tend to generate persistent inflationary pressure, which will force the central bank to keep the interest rate at a high level for a longer period of time,” according to Luciano Rostagno, chief Latin America strategist at Banco Mizuho do Brasil, quoted by BNamericas.

More government spending on social problems, including housing, should drive increasing demand for products including paint and coatings. “As the new president Lula favors higher social spending and expansionary fiscal policy, we forecast that the budget deficit will widen further in the forecast period, averaging 6.3% of GDP in the 2023-2026 horizon,” Allianz opined in January. “However, the weakened confidence in the next government’s commitment to fiscal responsibility could lead to currency depreciation and further inflationary pressures,” they note.

U.S.-Brazil Economic Cooperation to Warm

The U.S. government is pursuing stronger economic relations with Brazil now that Brazilian President Luis “Lula” da Silva has been elected. In February, U.S. Secretary of Commerce Gina Raimondo spoke with Brazil’s Vice President and Minister of Development, Industry, Trade, and Services Geraldo Alckmin. Raimondo “reaffirmed the Department of Commerce’s (DOC) commitment to working with Brazil on economic cooperation, combatting climate change, and several other issues of mutual interest between our countries,” the DOC reported.

The two diplomats also discussed the “longstanding and highly productive partnership between the Department and the Brazilian Ministry of Development, Industry, Foreign Trade, and Services through the U.S.-Brazil CEO Forum and U.S.-Brazil Commercial Dialogue,” DOC said.

The United States is currently Brazil’s second-largest trading partner after China, which takes 31.3% of Brazil’s exports, and provides 22.8% of its imports. The United States trails by far, taking 11.2% of Brazil’s exports and providing 17.7% of its imports, Allianz reports. Argentina, the Netherlands, Germany, Chile and India follow, with single-digit shares of Brazil’s foreign trade.

Abrafati Taps Top Producers for New Leadership

Abrafati has elected Marcos Allemann, from BASF as the president of the association for the 2022 to 2024 period. Daniel Campos, of Akzonobel is the first vice-president, and Nilton Rezende, of Sherwin-Williams is the second vice-president.

Advisors to the Abrafati board include: Agnaldo Bergamo, of Eucatex; Alan de Oliveira Souza, of Iquine; Andreas Gaudenz von Salis, of Montana Quimica; Marcelo Cenacchi, of Renner Sayerlack; Marcio Grossmann of PPG Industrial do Brasil; Mateus Aquino, of Axalta; Milton Jose Killing, of Killing, and Rafael Guerreiro Torezan, of WEG Tintas.

Brazil is now leading the regional Latin American paint manufacturers’ association, the Federação Latino-Americana de Associações de Técnicos e Fabricantes de Tintas, or LatinPin. Elections in December placed Luiz Cornacchioni as president of the group. Nicolás Iadisernia is first vice president, representing Asociación Tecnológica Iberoamericana de Pinturas, Adhesivos y Tintas, da Argentina, or Atipat. And the position of second vice-president is yet to be chosen but will represent Mexico’s Asociación Nacional de Fabricantes de Pinturas y Tintas, or Anafapyt.

LatinPin members hail from Brasil, México, Argentina, Colômbia, Ecuador, Uruguay and Bolívia. The group is preparing a presentation on its efforts for the March meeting of the World Coatings Council, in Turkey.

Sustainability a Key Industry Focus

Brazil is becoming a global leader in sustainability. Abrafati’s Sustainability Sectorial Program was launched in 2021 with the aim of “guiding and boosting the continuous improvement process of companies, in addition to constituting an important sectoral transparency tool in the areas of Governance and Leadership Corporate, Human Capital, Social Capital and Environment”.

Developed in cooperation with the no-profit Akatu Institute, of Sao Paulo, Abrafati’s Sustainability Assessment System has 44 indicators, divided into 17 sub-themes and 4 themes, all related to the 12 most relevant UN Sustainable Development Goals for the paint and varnish sector in Brazil. The first cycle of Abrafati members self-assessment began in December.

Brazil has long been a member of the World Coatings Council’s Coatings Care Program, which encourages the paint industry to promote health, safety and the environment. In Brazil, The Coatings Care Program is composed of four codes: Product Management; Production Management; Transport and Distribution; and Community Responsibility. The program establishes Management Practice Codes in the areas of Product, Production, Transport and Distribution, and Community Responsibility.

Over 50 paint and coatings factories in Brazil are active members of the Coatings Care program.

Upcoming November Abrafati Show

Abrafati will hold its industry-wide paint show — O Congresso Internacional de Tintas e a Exposição Internacional de Fornecedores para Tintas — again this year, November 21st to 23rd. The last show included 11,000 visitors and
140 exhibitors.