Apr 19, 2010
Chinese Import Demands Leads To Changing Brazilian Exports
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The visit of China's president Hu Jintao to Brazil last week underscores the importance of trade relations between the two countries. In the year 2000, China was ranked 12th as a destination for Brazilian exports. They climbed to sixth place in 2001, third in 2005, and first in 2009. As China has become Brazil's main foreign customer, the types of exports out of Brazil have changed as well. In 2000, raw commodities accounted for 22% of Brazil's exports while manufactured goods accounted for 59% and semi-manufactured goods accounted for 15%. In 2007, commodities accounted for 32% and manufactured and semi-manufactured goods accounted for 52 and 13% respectively. In 2010, commodities are expected to nearly equal the amount of manufactured goods exported from Brazil.
In 2000, the number one export from Brazil was airplanes valued at US$3.05 billion, nearly identical to the second leading product which was iron ore valued at US$ 3.04 billion. By 2007, iron ore exports had increased 300% to US$ 10.5 billion while airplane exports had only increased 57%. By 2007, the value of the airplane exports from Brazil fell to fourth place after iron ore, petroleum, and soybeans. The amount of manufactured goods have not decreased, it's just that the commodity sector has increased at a faster pace. The increased value of the commodity sector is also a reflection of higher commodity prices in recent years.
Iron ore exports from Brazil increased as China became the largest steel producer in the world in 1996. In 2008, China produced 567 million tons of steel, which was nearly half of the world's total steel production. By comparison, Brazil only produced 33.7 million tons of steel in 2008, so there is little wonder why the country exports most of its iron ore.
To underscore the importance of iron ore exports, the Chinese president was scheduled to visit a new large private port that is being built specifically to export large quantities of iron ore to China.