The Brazilian government made official Friday the renewal of its duty-free import quota for P1020 aluminum ingots, sows and t-bars.
Effective from Friday, 173,000 mt of duty-free imports are available until June 31, 2018, according to the official gazette.
S&P Global Platts learned on June 9 that a new 173,000 mt quota would be made available by the Foreign Trader Chamber (Camex).
While the decision in the official gazette says the available volume is 346,000 mt, this includes imports done under a Camex resolution that reduced the August 2016-August 2017 quota to 173,000 mt from 240,000 mt previously. In practice, the 173,000 mt quota which should last until next month -- but was totally consumed by mid-May -- was doubled until the end of June 2018, the Brazilian Aluminum Association (Abal) said in an email.
From July 2016 to June 2017, Brazil imported 220,472 mt of primary aluminum including both P1020 and billets.
The end of the import quota before the expected deadline brought a standstill to the primary aluminum import spot market in Brazil. Since the third week of May, when zeroed tariff import licenses started to be rejected by the foreign trade authority, no spot negotiations were heard by Platts.
Some consumers of term contracts were also impacted, although most of them were already prepared to the unavailability of the quota and either anticipated or postponed shipments. Those who were caught by surprise with ships on the way had to the pay the 6% import tax over the all-in price, which meant an additional cost of around $100-$130/mt.
Initially several market participants expected that the domestic suppliers would pass through this value, or part of it, to the domestic premiums. However, this did not happen and premiums were flat all over June -- in fact they started to drop in the end of the month due to the poor demand, and this week fell by $20/mt.
