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THE SCARCITY OF RAW MATERIAL AND THE IMPACT ON THE BRAZILIAN INDUSTRY

In the process of resuming activities after the peak of the economic crisis of the corona virus, the Brazilian industrial sector is now facing the lack of raw materials and the increase in prices of products needed for production.

According to special survey data from CNI (National Confederation of Industry), 68% of companies are struggling to buy raw materials in the national market. Among the companies that use imported inputs regularly, 56% reported difficulties.

In addition, 82% noticed an increase in prices, with 31% talking about a sharp increase. The survey counted on the participation of 1,855 companies, between October 1st and 14th, in 27 sectors of the transformation and extractive industries.

RESUME OF THE ECONOMY AND HIGH DOLLAR

According to the president of CNI, Robson de Andrade, companies chose to reduce their inventories to face the fall in sales and the difficult access to working capital in the first months of the crisis.

“The economy was reacting at a higher speed than expected. Thus, we had a mismatch between supply and demand for inputs. And both producers and suppliers had low stocks.”

“In addition, we have a strong devaluation of the real, which contributed to the increase in prices of imported inputs”, said the president of CNI.

DIFFICULTY IN SERVING CUSTOMERS

The survey points out that 44% are having trouble serving their customers. The reasons given were:

  • Out of stock (47%)
  • Demand greater than production capacity (41%)
  • Inability to increase production (38%)
  • Logistics problems (13%)
    Customer default (4%)
  • Others (2%)

STANDARDIZATION IN 2021 ONLY

Of the total number of companies that are unable to increase production, 76% claimed that they cannot expand it due to the lack of raw materials. And the problem should last at least another three months.

More than half (55%) of companies believe that the ability to meet demand will return to normal only in 2021.

In 10 of the 27 sectors considered, at least half of the companies are struggling to meet orders. The percentage of companies that find it difficult to serve their customers is higher in the mobile (70%), textiles (65%) and plastic products (62%) sectors.

SMALL COMPANIES ARE MORE AFFECTED

The lack of raw material for the production line is more serious among small companies. In this segment, 70% were affected by the lack of inputs, compared to 66% in the large ones.

The percentage of smaller companies that claim to face a lot of difficulty is higher, reaching 28% among small companies and 27% among medium-sized companies.

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