Already dispute between Brazilian industry against Chinese productsfiber optic cables were all the rage. In a decision taken last Thursday (17), the Chamber of Foreign Commerce (Camex), linked to the Ministry of Development, Industry, Commerce and Services (MDIC), increased the tax on imports from outside Mercosur to 35%.
The measure, which will be valid for six months from publication in the Official Gazette (which has not yet occurred), responds to a request from the producer Prysmianwhich pointed out to the government a flood of fiber optics coming from China.
The company claimed that its plant in Sorocaba (SP), one of the main plants in Latin America for this type of cable, is operating at a third of its capacity due to excess product. “Importation at predatory prices”, summarized Prysmian, in a presentation sent to the federal government.
In a statement to the MDIC last year, the Chinese government claimed that Brazilian production capacity for fiber optic cables would not reach 50% of the local market’s needs – read Of course, Vivo, Hey e Tim and independent internet providers (ISPs) – thus demonstrating that Brazil would be “highly dependent” on imports.
Prysmian, which accounts for around 30% of Brazilian production of fiber optic cables, asks MDIC to investigate a possible practice of dumping – when the product is subsidized by the government to be sold below its production cost – by the Chinese. The United States, the European Union and Mexico have already raised trade barriers to products manufactured in China.
The debate surrounding fiber optic cables is in line with those already occurring in steel. Brazilian steelmakers managed, after months of negotiations, to expand import duty for 11 types of steel to 25% in addition to imposing quotas for the purchase of these products from abroad.
Prices melt
In 2019, the price of a fiber optic cable in Brazil was US$7 per kilometer and, currently, the same product costs around US$2.50 per kilometer. The assessment is that the scenario has worsened since the end of 2023.
“Asian manufacturers export at prices 50% lower than the cost of local production”, says Prysmian, also informing that there is a risk of closing activities at the factory due to market conditions, affecting 150 employees. “How to avoid the impact of closing the plant? A set of actions that would promote protection of the national industry against the predatory prices currently practiced.”
Prysmian has been operating in Brazil since 1929, it is a company that was born from a division of Pirelli. In 2005, the Italian tire giant spun off this vertical of its business and listed the company on the Milan Stock Exchange, making it a corporation (without a controlling shareholder) ever since.
In addition to supplying cables to internet providers, the company is also a supplier of submarine cables to Petrobras and transmission cables to companies such as Enel and Neoenergia. In the first half of this year, the company recorded €7.82 billion in sales, with Latin America responsible for €708 million of this revenue.
