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São Paulo office rents start inching higher

10.07.2018

Lower vacancy rates in São Paulo’s luxury office market are allowing landlords to curb discounts and even raise prices at buildings close to capacity. The market has started turning more favorable to landlords in such São Paulo areas as Faria Lima – popular with financial firms – and Paulista Avenue or parts of Vila Olímpia. The Latin American Property Information System (Siila) shows rentals staying flat in the second quarter compared with the year-ago period, but lower discounts ended up meaning higher square-feet prices.

Source: Valor International

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Lower vacancy rates in São Paulo’s luxury office market are allowing landlords to curb discounts and even raise prices at buildings close to capacity. The market has started turning more favorable to landlords in such São Paulo areas as Faria Lima – popular with financial firms – and Paulista Avenue or parts of Vila Olímpia. […]

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Investment banks have best start to a year in Brazil since 2013

03.07.2018

Investment banks had the best start to a year in Brazil since 2013. Their combined revenue in the first half totaled $485 million, a 36.2% year-over-year growth, according to a survey by consultancy Dealogic.

Performance is even better in reais, as the dollar strengthened on average 7.7% against the Brazilian currency in the period. “It was a very different first half from last year’s, with fewer stock and acquisition transactions, but of larger volumes,” says Alberto Fernandes, vice president at Itaú BBA.

Foreign banks have retaken a role they had not had for at least five years. They grabbed 63% of the fees compared with last year’s 43%, considering the volume of the ten-largest institutions in the ranking. Goldman Sachs, Morgan Stanley and Bank of America Merrill Lynch, of the US, ranked first, second and fourth in the January-June revenue ranking.

It is the first time that Goldman Sachs takes on the lead in Brazil in the period, according to Dealogic, driven by its performance in equities. The segment accounted for most of the banks’ fees for the second year in a row. Goldman Sachs participated in the largest stock sales of Brazilian companies in the period, coordinating two share offerings of PagSeguro, payment processor that was listed on the New York Stock Exchange and made a follow-on offering in June. On the Brazilian stock market, Goldman was in the group of banks coordinating this year’s largest stock offering so far, of healthcare operator Hapvida.

“Healthcare companies and fintechs are looking for a more global, specialized investor, who wants opportunity in a sector regardless of their country of origin. In such cases, global banks participate more,” says Antonio Pereira, head of investment banking at Goldman Sachs in Brazil. “In the case of PagSeguro, for example, a lot of investors who joined the offering are not accustomed to looking at Brazilian companies.”

Goldman has been boosting its investment banking team in Brazil. In March, it hired Ricardo Bellissi, who headed mergers and acquisitions and investment banking at Santander. Last year, Goldman hired Marcelo Naigeborin, former co-director of investment banking at Morgan Stanley in Latin America, for “special situations,” and an ex-partner at BTG Pactual, Fabio Federici, as vice president for equities.

Morgan Stanley also coordinated the two PagSeguro’s offerings and participated in the stock issues of NotreDame Intermédica and Banco Inter. In addition to the consolidated ranking, foreign banks also accounted for the lion’s share of fees in the lending segment, led by France’s BNP Paribas and Japan’s Mizuho and Sumitomo Mitsui.

For financial-service providers’ executives, the transaction volume and the Brazilian context at the end of last year heated up capital market competition, including with foreigners. “Competition has increased because Brazil has shown signs that the economy was going in a better direction than it went, combined with a low interest rate, which makes it cheaper to finance companies in the capital market,” Mr. Fernandes, with Itaú BBA, says.

Itaú BBA was the Brazilian bank with the best consolidated performance in the period. The bank led merger and acquisition deals, was the Brazilian lender with the largest volume of shares issued and loans, and the second in debt issuance, after Banco do Brasil.

Unlike the stock market and M&A, the debt market was also busy in number of transactions. BB alone participated in 9 of the 14 issues abroad in the period, totaling $11 billion, and in the domestic market there were almost 50 issues totaling R$30 billion, compared with 20 issues in the same period of 2017.

“We saw a large liquidity in the international market, concentrated between January and April, and it was very good for companies to advance funding. The same happened in the domestic market, with higher participation of institutional investors,” says Fernanda Arraes, executive manager for capital markets at BB. “The rise in the US interest rate and uncertainties of the trade war between China and the United States have changed the scenario, affecting more than the electoral year’s volatility.”

BB has 30 debt-issuance mandates for the second half. But overall, banks expect a slowdown in capital markets in the third quarter. “In the second half, M&A is likely to be the main activity of investment banks,” says Mr. Fernandes.

There are a number of ongoing operations that can be completed by the end of the year, such as a partnership between Boeing and Embraer, the purchase of a stake in petrochemical group Braskem by Dutch company LyondellBasell, and sales of assets of both state-owned Petrobras and food company BRF — banks do not comment specifically on any of them. They argue that, after the elections, the pace is poised to accelerate. “We are optimistic, looking at 2019 and 2020,” Goldman’s Mr. Pereira says.

Source: Valor International

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Investment banks had the best start to a year in Brazil since 2013. Their combined revenue in the first half totaled $485 million, a 36.2% year-over-year growth, according to a survey by consultancy Dealogic. Performance is even better in reais, as the dollar strengthened on average 7.7% against the Brazilian currency in the period. “It […]

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BlackRock Bumps Up Bet on Brazil After Assets Tumble

02.07.2018

BlackRock’s feeling Brazil again.

The world’s largest money manager has increased its bet on Brazilian assets rebounding after one of Brazil’s worst quarters in recent years.

“We remain with a constructive view on Brazil and have recently added to our positions, reinforcing Brazil as our largest overweight,” William Landers, a managing director at BlackRock Inc. in New York, said in an interview Friday.

The Ibovespa index fell 15 percent in the second quarter of the year, posting its biggest quarterly drop since 2015, hurt by the perspective of tighter U.S. monetary policy and mounting domestic woes. Brazil had one of its worse performances relative to the Emerging Markets index ever, according to Landers.

“We do not think this is justified,” he says. The Brazilian real slid 15 percent during the quarter and led losses among developing nation currencies alongside the Argentinean peso, down 30 percent.

Despite the vast uncertainty over the outcome of Brazil’s general elections in October, Landers still suspects that a candidate with a populist agenda will have a very difficult time winning the dispute. “A candidate from the center or even from the right would likely give continuity to the reform agenda and allow Brazil to continue on its recovery path,” he said.

As centrist names struggle in opinion polls, concerns that the next president may not move forward with the fiscal reforms were among the factors that drove Brazil’s credit default swaps to the highest level since 2015. “Pension reform is a must for the incoming administration in order to deal with fiscal imbalances and Brazil’s growing debt levels,” Landers said.

While the outlook for economic growth was undermined by a trucker strike that resulted in food and fuel shortages, at least Latin America’s largest economy still has the support of low interest rates, according to Landers.

“The central bank will be able to keep rates at historical low levels, which will help with the ongoing, albeit slow, recovery,” he said.

There could be also room for the real to appreciate, he said.

Source: Bloomberg

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BlackRock’s feeling Brazil again. The world’s largest money manager has increased its bet on Brazilian assets rebounding after one of Brazil’s worst quarters in recent years. “We remain with a constructive view on Brazil and have recently added to our positions, reinforcing Brazil as our largest overweight,” William Landers, a managing director at BlackRock Inc. […]

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Brasil pode ganhar R$ 28,5 bilhões com guerra comercial China-EUA

01.07.2018

Estudo da CNI mostra que tarifas impostas pelos dois países possibilitam aumento das exportações brasileiras

A guerra comercial entre Estados Unidos e China aumenta o potencial de exportação do Brasil para esses dois países em US$ 7,4 bilhões (R$ 28,5 bilhões) ao ano, de acordo com levantamento da CNI (Confederação Nacional da Indústria), feito a pedido da Folha.

Os EUA anunciaram sobretaxas de 25% sobre 818 produtos chineses, no valor de US$ 34 bilhões (R$ 131 bilhões) em exportações, que passam a valer no dia 6 de julho.

Outros 284 produtos, no valor de US$ 16 bilhões (R$ 61,7 bilhões), serão alvo de consulta pública em 24 de julho e podem ter tarifas depois disso.

Os EUA acusam a China de roubo de propriedade intelectual, por exigir de empresas americanas transferência de tecnologia para estatais chinesas, para terem acesso ao mercado chinês.

A China anunciou tarifas retaliatórias de 25% sobre 545 produtos americanos, em um total de US$ 34 bilhões (R$ 131 bilhões), que também passam a vigorar em 6 de julho.

Pequim avalia uma segunda rodada de sobretaxas sobre US$ 16 bilhões (R$ 61,7 bilhões) em produtos americanos, ainda sem data definida.

De forma geral, o Brasil, como todos os outros países, tende a sair perdendo com a guerra comercial por causa do impacto que essa escalada protecionista pode ter no crescimento mundial e nos preços das commodities.

“Mas o levantamento mostra que há espaços que o Brasil pode ocupar, é hora de as empresas brasileiras se movimentarem, porque EUA e China vão buscar outros fornecedores”, diz Diego Bonomo, gerente-executivo de Assuntos Internacionais da CNI.

Alguns dos produtos americanos que passarão a ser taxados na China já são exportados pelo Brasil, como carne de porco, soja e pescados, e pode haver grande aumento significativo nas vendas.

Cerca de 35% da exportação brasileira de pescados —que incluem peixe, crustáceos e moluscos— é destinada à China.

Os produtos brasileiros pagavam sobretaxa de 12% para entrar no país, e hoje pagam 7%. Grande parte dos exportadores de pescados para a China tem tarifa zero.

“Com os americanos passando a pagar 25% de tarifa, ganhamos competitividade e vamos migrar para o mercado chinês, que vai pagar melhor”, diz Eduardo Lobo, presidente da Abipesca (associação do setor).

Ele espera alta de 12% na exportação, que é de US$ 240 milhões (R$ 925,2 milhões), por causa do redirecionamento das vendas e melhores preços.

No caso de carne suína, o Brasil espera dobrar sua exportação para a China, de 48,9 mil toneladas em 2017 para 100 mil toneladas neste ano.

Segundo o estudo da CNI, o Brasil poderia aumentar em até US$ 6,4 bilhões (R$ 24,7 bilhões) suas vendas para a China, passando a exportar produtos que vende para outros países, mas ainda não para o mercado chinês, ou vende muito pouco.

É o caso de alguns produtos químicos, cereais, frutas e veículos. Eles também são exportados pelos americanos, mas passarão a ter tarifa de 25%.

“Obviamente, não somos os únicos que vão tentar ganhar esse pedaço do mercado, e as novas tarifas não vão inviabilizar toda a exportação americana para a China, e vice-versa”, diz Bonomo.

Existem alguns obstáculos que podem impedir o Brasil de aproveitar essas oportunidades, como o custo do transporte para a China, concorrência de outros países que têm preferências tarifárias e, no caso dos produtos agropecuários, barreiras não tarifárias.

Por exemplo: o Brasil exporta 40 mil toneladas de suco de laranja para a China ao ano.

Mas o país não exporta alguns tipos de suco, porque regras aduaneiras aumentam muito o custo –e isso não mudaria; nem as tarifas de 25% sobre o suco americano, que tem pequena participação na China, fariam muita diferença.

No mercado americano, o principal ganho será aumento de competitividade em produtos industriais.

O Brasil exporta US$ 3,9 bilhões (R$ 15 bilhões) em produtos em que concorre com a China nos EUA, como autopeças, alguns tipos de máquinas, produtos químicos e plásticos, borrachas.

Além disso, há cerca de US$ 1 bilhão (R$ 3,86 bilhões) em produtos que o Brasil já exporta para o mundo, mas não para os EUA, ou apenas em quantidades muito pequenas, e poderia passar a vender no mercado americano.

São alguns tipos de veículos e tratores, máquinas e materiais elétricos, autopeças, plásticos e máquinas.

Para o estudo, a CNI fez um levantamento de todos os produtos que passarão a ser taxados na China e nos EUA, determinou quais deles são exportados pelo Brasil para o mundo, mas não para esses países, e aqueles que já são exportados, e podem ter aumento.

A CNI teve de converter os códigos tarifários dos EUA e da China para o código harmonizado de seis dígitos, o que implica perda de especificidade.

Source: Folha de S. Paulo

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Estudo da CNI mostra que tarifas impostas pelos dois países possibilitam aumento das exportações brasileiras A guerra comercial entre Estados Unidos e China aumenta o potencial de exportação do Brasil para esses dois países em US$ 7,4 bilhões (R$ 28,5 bilhões) ao ano, de acordo com levantamento da CNI (Confederação Nacional da Indústria), feito a […]

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Government lowers 2021 inflation target to 3.75%

27.06.2018

The National Monetary Council (CMN) set the inflation target for 2021 at 3.75%. The tolerance range will be of 1.5 percentage point, up or down. With this decision, the government continues down the path of a gradual disinflation in the economy, with targets already set at 4.25% for 2019 and 4% for 2020.

This was not the first time the CMN dared lower the target to the range of 3%, a level closer to the average for emerging nations. This was attempted during the first years of the regime that started in 1999, when the council established a target of 3.25%. Yet there were major frustrations, because of shocks of a diverse nature that compromised results.

Because inflation expectations are anchored – and have been since April 2017 – below the target for this year (4.5%) and for the coming years, the cost of additional disinflation to society is greatly reduced. This means that inflation may continue to fall without the need to raise interest rates. There are real chances for the country to operate with low rates, close to those of developed economies, both in terms of interest and inflation.

“Advances in the evolution of inflation have been considerable,” the Ministry of Finance said in a note. “The cumulative 12-month variation for the IPCA [official inflation index] ended 2015, 2016 and 2017 at 10.67%, 6.29% and 2.95%, respectively, standing at 2.68% last May.”

At the Tuesday meeting, the CMN decided to maintain the targets set for the next two years, in spite of analysts advocating more ambitious disinflation, taking advantage of current prices indices below 3%. On the other hand, the council didn’t endorse the view of some economists that Brazil can’t afford an inflation target below 4% because of the huge fiscal imbalances that have yet to be addressed.

Source: Valor International

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The National Monetary Council (CMN) set the inflation target for 2021 at 3.75%. The tolerance range will be of 1.5 percentage point, up or down. With this decision, the government continues down the path of a gradual disinflation in the economy, with targets already set at 4.25% for 2019 and 4% for 2020. This was […]

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Mercosul oferece cota para carro europeu com tarifa 50% menor durante sete anos

26.06.2018

O Mercosul ofereceu à União Europeia (UE) uma cota para entrada de carros europeus com tarifa 50% menor do que a atual, pelo período de sete anos, conforme o Valor apurou. Isso significa que a alíquota de importação cairia de 35% para 17,5% sobre determinado volume, ainda não negociado, de carros europeus. Após o prazo de sete anos, começaria a redução da tarifa sobre automóveis europeus, até a eliminação oito anos depois.

A sinalização dada pelo Mercosul é vista como uma demonstração a mais do interesse do Brasil, Argentina, Paraguai e Uruguai em concluir a negociação do acordo de livre comércio, que seria oito vezes mais importante do que o acordo UE-Canadá e quatro vezes maior que o acordo UE-Japão.

Essa proposta poderia atender, de uma outra forma, a exigência – que parece ainda estar em consideração entre montadoras europeias – de que o Mercosul faça um choque de liberalização logo na implementação do acordo, com corte de cinco pontos percentuais na tarifa sobre todas as importações de carros, passando de 35% para 30%, que seria mantido na fase de transição de sete anos.

Na realidade, quem pediu esse período de proteção no mercado brasileiro foram as filiais das alemães BMW e Audi, as montadoras que fizeram os investimentos mais recentes no país.

O Mercosul sinalizou à UE que está disposto a retomar as barganhas em julho, em Bruxelas, para tentar anunciar um acordo político de livre comércio ainda no verão europeu. A ideia do bloco é de os negociadores chegarem a Bruxelas no dia 9, uma semana antes da cúpula da Comunidade de Países Latino-americanos e do Caribe (Celac) e UE, marcada para 16 e 17 de julho. No entanto, o Mercosul não recebeu até agora a luz verde da UE para que essa reunião possa acontecer.

Para Andreas Renschler, presidente da Comissão para América Latina da Indústria Alemã (LADW) e membro do “board” mundial do grupo Volkswagen, as ameaças do presidente americano Donald Trump de impor sobretaxas na entrada de carros europeus termina por dar um forte estímulo à conclusão das negociações UE-Mercosul. “Isso ajuda a colocar pressão nos dois blocos, e a ver que as coisas podem se tornar ruins [sem o acordo].”

O presidente da Federação das Indústrias Alemães (BDI), Dieter Kempf, deu a mesma mensagem, pedindo ao governo alemão para defender a conclusão rápida do acordo diante do conflito com os EUA e da vantagem que as empresas europeias terão no Mercosul. “Ao reduzir as tarifas, as empresas europeias economizariam mais de EUR 4 bilhões por ano.”

Entre os pontos ainda pendentes, está a questão do drawback (importação de insumos com isenção de tarifa para produzir bens de exportação), que o Brasil não abre mão. Cerca de 25% das exportações brasileiras usam esse instrumento. Os europeus querem sua eliminação. Há também questões sobre regras de origem e indicação geográfica, mas negociadores consideram que há meios de contornar as dificuldades, se houver real vontade política de avançar.

Ocorre que a Comissão Europeia, que negocia pelos países da UE, continua obtendo concessões do Mercosul e depois não coloca nada mais na mesa. Essa tática levou recentemente o Uruguai a demonstrar exasperação com reuniões sem fim. Partiu do governo brasileiro fazer prevalecer a mensagem de que o bloco continua empenhado em tentar concluir a negociação birregional.

Source: Valor Econômico

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O Mercosul ofereceu à União Europeia (UE) uma cota para entrada de carros europeus com tarifa 50% menor do que a atual, pelo período de sete anos, conforme o Valor apurou. Isso significa que a alíquota de importação cairia de 35% para 17,5% sobre determinado volume, ainda não negociado, de carros europeus. Após o prazo […]

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US tariffs tip soyabean balance in Brazil’s favour

25.06.2018

As trade war grows, deals are shifting southwards for bulwark of world food supplies

After the Soviet Union invaded Afghanistan, then US president Jimmy Carter retaliated in 1980 with an embargo on American grain and soyabean sales to the socialist superpower.

It backfired. Russia occupied Afghanistan for years. The embargo also launched Brazil’s soyabean industry, now the US farmer’s arch-rival.

This cold war history is being recalled as trade tension rises between the US and China. China will sharply increase tariffs on US soyabeans next month in response to tough new duties from the Trump administration. The action may embolden Brazil’s producers to plant yet more beans, knowing their competitor is disadvantaged.

Soyabeans are a bulwark of world food supplies. As emerging market consumers eat more meat, meal ground from the smooth yellow oilseeds is an indispensable source of protein for pigs and chickens. World use of soyabeans has increased by half in the past decade to more than 350m tonnes, outstripping demand growth for staple grains, UN statistics show.

China dominates consumption, buying 63 per cent of global exports to feed a vast industry that crushes soyabeans into meal and vegetable oil. It has historically balanced offshore supplies between the US and South America.

The tariffs are tipping the balance south. Brazilian soyabeans are fetching a rich premium over US beans as the trade war escalates. Last week supplies at the Brazilian port of Paranaguá were selling for $385.60 a tonne, $35.70 more than soyabeans sold on the US’s southern Gulf of Mexico coast, reflecting strong interest from China. The premium belies the fact that there are plenty of beans to choose from: Brazil is harvesting a blockbuster crop of 118m tonnes.

“China is going to Brazil, there’s no doubt about it,” said Pedro Dejneka, partner at MD Commodities, an agribusiness consultancy.

Farmers in Brazil have an extra incentive to sell now because the real, the domestic currency, is down 13 per cent against the dollar this year. That boosts earnings when they sell to the dollar-denominated global soyabean market.

The threat that US growers will lose out has unfolded in both Chicago’s futures markets and Washington’s corridors of power. Last week US soyabeans slid below $9 a bushel, the weakest price in two years.

The White House is searching for ways to aid farmers. “We will use all of our authorities to ensure that we protect and preserve our agricultural interests,” the US Department of Agriculture said, declining to be more specific.

The tariff drama is the latest in an already jarring set of events in the soyabean market this year, including a drought that slashed Argentina’s production and a truck driver strike that raised costs for shipping Brazil’s crop. Meanwhile, China’s demand has marched forwards.

Paul Kim, founding partner of Aventis Asset Management, a commodities hedge fund in Illinois, said the gyrations have made it risky to hold big soyabean positions. Furthermore, there is a chance that Washington and Beijing could mend their differences and call off the tariffs. Just a month ago the countries publicly committed to “meaningful increases” in US agricultural exports.

China also cannot live without US soyabeans, at least for now. It is forecast to import more than 100m tonnes in the coming year, far more than Brazil could supply without starving its own livestock industry.

“But in the long run, it may spur an increase of [planted] acres in South America much larger than has normally been done,” said Mr Kim. Traditional buyers may look to source beans from areas other than the US. It may take three to four years.”

Sam Funk, analyst at Rabobank, said that if US soyabean exports were to fall below 2bn bushels (54m tonnes), land devoted to the crop would likely decline by 3m-4m acres. A survey of US farmers this spring pointed to 89m acres of seedings, a figure due to be updated on June 29.

The US sold about 36m tonnes of soyabeans to China last year. John Baize, consultant to the US Soybean Export Council, estimates that figure would halve with the tariffs in place. The decline would be offset by exports to other markets, he said. These include Europe, south-east Asia and Mexico, which excluded soya products from its own new tariffs on US products to shield the domestic livestock industry.

Mr Funk said the jockeying could disrupt the annual rhythm of soyabean shipping. In years past, both countries would send out exports in a burst of port traffic soon after the harvest, peaking in June-July for Brazil and October-November for the US. Plotted on a chart, the volumes form an alternating pair of oscillating waves.

With China set to buy from Brazil, buyers crowded out of that market might rely on year-round shipments from the US, breaking down the seasonal pattern, said Mr Funk.

It is not the most efficient outcome, he added. Indeed, if China bought up enough of Brazil’s harvest, some envisage a seemingly absurd scenario. “In Brazil, they’ve sold so much they may have no choice but to import US soyabeans,” said Mr Kim.

The events of 1980 provide a precedent. After Mr Carter’s embargo curtailed direct feed grain sales to Russia, Brazil’s imports of US grain more than trebled.

“The embargo apparently altered world patterns of grain trade, as evidenced by the sharp increase in imports of US grain by some nations following the embargo,” a Federal Reserve study concluded. “Hence, there is evidence that large quantities of US grain were shipped to nations which normally purchase grain from other sources, thereby permitting these sources to supply grain to the Soviet Union.”

Source: Financial Times

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As trade war grows, deals are shifting southwards for bulwark of world food supplies After the Soviet Union invaded Afghanistan, then US president Jimmy Carter retaliated in 1980 with an embargo on American grain and soyabean sales to the socialist superpower. It backfired. Russia occupied Afghanistan for years. The embargo also launched Brazil’s soyabean industry, […]

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Duratex and Lenzing to invest $1 billion in Brazil factory

22.06.2018

Duratex — the maker of wood panels, ceramic ware and bathroom fixtures – announced Thursday that it was forming a joint venture with Austria’s Lenzing AG to produce dissolving pulp that can be spun into viscose fibers in Minas Gerais state. The two companies will invest a total of $1 billion in a new factory, which will have capacity to process 450,000 tonnes a year.

The production facility, to be located in the western part of Minas Gerais state, will be the world’s largest, according to Duratex Chief Executive Antonio Joaquim de Oliveira. The dissolving pulp segment will account for one-third of Duratex’s earnings when the factory is fully operational.

“The outlook for returns is very good, and risk is low,” Mr. Oliveira told Valor. Return on capital and margins for the new segment are better than for Duratex’s usual lines of business. The executive says that Duratex won’t immediately feel the effects of the joint venture, as viscose production using dissolving pulp – an input for the textile industry – is slated to begin in 2022.

Lenzing – one of the world’s largest pulp fiber producers – will control the new company, with a 51% stake. Duratex will hold the remaining 49%. Earnings from the joint venture will be consolidated in Duratex earnings under the equity method. The new company’s board will consist of five members.

Dissolving pulp will become Duratex’s fourth operational front, alongside Deca (bathroom ceramics and hardware), wood panels, and ceramic cladding. The new business line is part of the company’s strategy to reduce its dependence on the Brazilian domestic market and on the construction industry. “Last year, we outlined a strategic long-term plan determining activities for existing operations and new businesses to withstand the crisis,” the executive said.

All of the output from the joint venture will be sold to Lenzing at market prices and exported to the company’s factories in Europe, Asia, and the United States. At the start of the year, when negotiations were already advanced, dissolving pulp prices stood at $900 a tonne. On Thursday, one tonne was trading for $935.

Two other producers make dissolving pulp in Brazil: Bahia Specialty Cellulose, owned by the Indonesian group Royal Golden Eagle via Bracell Limited, and Jari Celulose.

More than half of the amount that will be invested by Duratex in the venture will come in the form of 43,000 hectares of forests the company is contributing, and the rest paid for with funds to be raised on local and international markets. Duratex CEO Mr. Oliveira said that the dissolving pulp factory would be set up “practically in the middle of the forest.” The average distance radius is 50 kilometers, slightly less than the 60 kilometers for Duratex’s current wood panel operations.

Mr. Oliveira said that during his nearly 32 years at the company, this is the “most detailed, most discussed, and most time-consuming project” he has seen. “I am super excited,” he said. Before the deal was closed, the two companies talked for almost two years to work out the partnership and hammer out the details.

Duratex had planned to build a wood panel factory in the western region of Minas Gerais known as the Triângulo Mineiro, but gave up due to a deteriorating market. Instead, it hired a consultancy to find some other use for the wood the company owned in the region. At the same time, Lenzing was looking for a way to enter Brazil, Mr. Oliveira said. “We have a large base of forests and forestry technology, while Lenzing has dissolving pulp technology,” he said.

The final decision regarding the project will take place in the second half of 2019. In the time leading up to then, Duratex will file for the environmental licenses needed for the project and to set up the necessary infrastructure, as well as detailing the project’s engineering needs. “We will only back out if there is an unexpected setback,” Mr. Oliveira said.

The tree farm that will be reserved for the joint venture straddles five municipalities in the Triângulo Mineiro region – Araguari, Estrela do Sul, Indianópolis, Romaria and Nova Ponte. The companies have not yet decided which city will house the production facilities. Until dissolving pulp production begins, Duratex will continue supplying its current contracts for trees, boards, and woodchips.

The executive said that the joint venture with Lenzing, together with the sale to rival Eucatex of facilities and equipment to make fine fiber boards, and the directing of surplus forests in São Paulo state – be it to Suzano Papel e Celulose or to any other buyer – allows Duratex to complete its cycle of directing its wood assets. “All our wood assets have been optimized,” he said.

In February, Duratex announced the sale of 30,000 hectares of land and forest to Suzano, for R$1.05 billion. The deal was set to happen in two phases – the first was concluded at the moment of the contract’s signing, and the second part allows Suzano to exercise options by July 2. The market is wondering if Suzano will indeed exercise the option before concluding its merger agreement with Fibria, but Duratex declined to comment.

Mr. Oliveira said that despite the current economic environment, Duratex sees the possibility of this year turning out better than 2017. “We’ll have to see if there is a recovery in the second half,” the executive said. He sees the wood panel market improving, but Deca’s business – of ceramics and hardware – has been more difficult.

“We are very satisfied with the results, given the current moment in time, but our performance is far from what it once was,” Mr. Oliveira says.

Recently, Duratex had been expanding its businesses, into showers, ceramic cladding, and digital products thanks to its purchase of Ducha Corona, of Ceusa, and a minority stake in the Viva Decora portal.

Source: Valor International

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Duratex — the maker of wood panels, ceramic ware and bathroom fixtures – announced Thursday that it was forming a joint venture with Austria’s Lenzing AG to produce dissolving pulp that can be spun into viscose fibers in Minas Gerais state. The two companies will invest a total of $1 billion in a new factory, […]

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Canada pension fund looking at Brazil infrastructure opportunities

21.06.2018

The Canada Pension Plan Investment Board (CPPIB) is looking into Brazilian infrastructure assets as the country moves forward with privatization plans and as state-run companies such as Petrobras and Eletrobras divest to try to raise funds and cut costs. CPPIB has about $12 billion invested in Latin America – about one-third directed at Brazil – and wants to increase that. Latin American investments account for 3.5% of the pension board’s total investments, but they want that number to be 5% in three to five years.

Source: Valor International

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The Canada Pension Plan Investment Board (CPPIB) is looking into Brazilian infrastructure assets as the country moves forward with privatization plans and as state-run companies such as Petrobras and Eletrobras divest to try to raise funds and cut costs. CPPIB has about $12 billion invested in Latin America – about one-third directed at Brazil – […]

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Accor to spend R$50 million on upscale hostel-style Rio lodging

19.06.2018

French hotel chain Accor is paying R$50 million to transform a six-residence compound at the foot of the Christ the Redeemer statue into a hotel-hostel facility operated by Jo&Joe, which targets millennial consumers and mixes shared and private spaces in their properties. This is the first Jo&Joe development outside of Europe. Although excess supply following World Cup and Olympic construction booms means many hotel rooms are empty in the city of Rio de Janeiro, Patrick Mendes, Accor’s chief executive for Latin America, says the hotel’s niche market means occupancy rates won’t be a problem.

Source: Valor International

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French hotel chain Accor is paying R$50 million to transform a six-residence compound at the foot of the Christ the Redeemer statue into a hotel-hostel facility operated by Jo&Joe, which targets millennial consumers and mixes shared and private spaces in their properties. This is the first Jo&Joe development outside of Europe. Although excess supply following […]

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