Brazil has joined the global wave of protectionist trade actions by imposing definitive anti-dumping (AD) duties on polyether polyol imports from China and the U.S., effective July 3, 2025, via GECEX Resolution No. 754. The measures cover polyether polyols with molecular weights of 300–4,500 g/mol and ≥90% purity, including blends, under NCM 3907.29.39. While some respondents, such as Wanhua, aimed to exclude "formulated" mixtures, authorities maintained a broad scope to ensure effective enforcement.
The decision followed a petition by Dow Brasil Sudeste, Brazil’s sole domestic producer, and a year-long investigation by SECEX under Decree 8058/2013, in line with WTO rules. The final ruling confirmed that dumped imports caused material injury to the local industry.
Comparative Historical Context
Brazil has deployed trade remedies in chemicals before. Most recently (May 2025), Brazil raised duties on suspension PVC from the U.S. to protect local resin producers. Like the polyol case, PVC-makers (Braskem, Unipar) petitioned against “artificially low” imports, leading to dramatic duty hikes. That PVC case shows how duties can swiftly shift supply chains: importers began sourcing from Egypt, Mexico or Taiwan instead of the U.S.. We expect polyol trade flows may likewise divert.
Internationally, anti-dumping on polyols is not new. For example, India has repeatedly investigated Chinese polyether polyols. In March 2024, India issued duties on Chinese Wanhua polyol and others, much like Brazil’s approach. This reflects global oversupply: China’s polyol exports have expanded rapidly, pressuring markets from Asia to Latin America. India’s experience shows similar concerns: domestic producers felt undercut by cheap Chinese polyol, prompting duties. On balance, Brazil’s action mirrors a worldwide trend where emerging industries use AD measures to defend local PU chemical sectors against aggressive imports.
Global Supply Chain Implications
The new Brazilian duties will reshape trade flows for polyether polyols. Imports from China and the U.S., which historically account for the bulk of Brazilian polyol intake, will become much more expensive. Market participants are likely to seek alternative suppliers. Possible candidates include producers in Southeast Asia or even domestic Mercosur neighbours. Analysts noted how Brazil’s PVC AD led buyers to Egypt, Mexico and Taiwan; a polyol case could see similar redirection. However, significant new sources may not exist in Mercosur: current heavy polyol capacity resides outside Latin America.
Logistically, trade routes could shift. Instead of U.S.-China barrel-ship shipments via the Panama Canal, we may see more long-haul deliveries from Asia or smaller traders from Europe. In addition, global suppliers might restructure contracts: for example, U.S. exporters facing high duties could redirect some tonnage to other markets, while Brazilian buyers may negotiate spot contracts. In short, Brazilian polyol imports will likely decline from China/US and either be replaced by other sources or simply shrink, causing tighter supply and longer lead times.
Higher duties also change the cost structure and competitiveness. Pre-duty, China and U.S. polyols were reportedly sold at substantially lower prices. Brazilian data cited in the resolution show U.S. import prices were consistently below Chinese levels, except briefly in Q1 of 2021. For instance, SECEX found U.S. polyol CIF prices were lower than those from China throughout the review period, with the U.S. share of imports around 30%. Post-duty, import prices effectively jump by the duty amounts, so Brazilian foam producers can expect steeply higher feedstock expenses. This creates inflationary pressure: Brazil’s mattress association (ABICOL) warned in April 2024 that combined AD and tariff measures could raise polyol costs and spark a chain of price hikes throughout foam manufacturing. They pledged to fight the measures politically and legally, stressing that protection should favour genuine Brazilian producers and not necessarily foreign-owned multinationals.
Impact on Brazil’s Domestic PU Industry
Domestic producers, primarily Dow Brasil Sudeste Industrial Ltda, stand to gain protected market share as imported polyols become less price-competitive. With China and the U.S. effectively sidelined, Dow may gain pricing power and expand sales volumes, though capacity constraints and the need for consistent quality remain challenges. While Dow and industry association Abiquim also lobbied to raise Brazil’s MFN tariff from 12.6% to 20%, GECEX rejected the request in November 2024 due to strong opposition from downstream users. As a result, only the anti-dumping duties were adopted. The mattress industry association ABICOL supported keeping the MFN tariff unchanged but remained active in the AD case, reflecting the sector’s mixed priorities. In the short term, domestic producers will likely raise prices closer to the new duty-inclusive level, though Brazilian polyol supply may remain tight.
Longer term, higher protected margins could spur new investment by existing or new producers. If economics are attractive, we may see either expansion of Dow’s plant or interest from global polyol makers, though global oversupply could dampen that. Higher local prices might also encourage some end-users to invest in modest in-house blending or to shift some formulations toward locally available chemistries.
Downstream Effects (Automotive, Furniture, Footwear, etc.)
Brazil’s foam-using sectors face the sharpest impact. Polyether polyols are key to flexible PU foam, used in mattresses, upholstered furniture, automotive seating and interiors, footwear, and more. Analysts warn that an immediate effect will be higher raw material costs for foam producers.
The mattress industry, represented by ABICOL, is especially vocal. In April 2024, it issued a bulletin noting that Dow’s petition claims dumping margins of 59% (China) and 31% (US) below domestic prices. ABICOL argued that imposing an AD duty (and higher tariffs) would “increase the price of Brazilian PU products and hurt the entire mattress sector”. It pointed out that Dow alone cannot satisfy even half of the national polyol demand, so restricting imports risks foam shortages. The association warned that Brazilian foam-makers would become vulnerable to competition from Mercosur neighbours who could supply final PU products without Brazil’s new import duties. In effect, ABICOL fears that the policy could transfer the raw material cost issue to a finished goods trade issue.
The automotive and shoe industries will also experience secondary impacts. Automakers and their seat suppliers may see foam sheet prices rise modestly, slightly increasing car production costs. Footwear uses some polyol-based PU; higher polyol costs could feed into minor cost hikes. While these sectors are less concentrated than mattresses, they rely on the same competitive market for raw foam. All told, consumers in Brazil may see higher prices for sofas, beds, car seats and certain shoes over the coming years. Economists note this will add upward pressure on Brazil’s inflation, 5.35% in June, which is already above the target of 4.5%.
Economic and Pricing Analysis
From a trade data perspective, the newly imposed anti-dumping duties are expected to significantly reduce imports of polyols from the United States and China. Before the investigation, Brazil’s polyol import volumes were on the rise, with official filings indicating that Chinese-origin imports grew by 29% more tonnage in 2024 compared to 2023. However, with final duties ranging from $1,408 to $1,469 per metric ton on Chinese exporters and $555 to $680 per metric ton on U.S. suppliers, these products are poised to become economically unviable in the Brazilian market.
Price-wise, domestic polyol will be repriced upward. The combined effect of duty and existing tariffs means the import cost could double for many suppliers. Dow and any other suppliers will likely take advantage, and foam producers will pass on much of the costs.
Given foam’s share in final products, macro effects are muted but visible. Furniture inflation could tick up, as could mattress prices. Brazil’s IPCA inflation index may see a small bump from higher intermediate chemical costs. The central bank will likely monitor any ripple into consumer prices. Notably, one risk is that high domestic polyurethane prices incentivise cross-border shopping or grey-market imports from Uruguay/Argentina using Mercosur free-trade, adding uncertainty to enforcement.
Outlook and Monitoring
The duties took effect immediately on 4 July 2025. Parties will watch for three key developments: First, SECEX’s public interest review (per Art. 4 of the resolution) may lead to adjustments if industry relief is justified. Second, actual import statistics will reveal whether U.S./China polyol shipments indeed collapse and if other countries fill the void. Third, downstream inflation gauges will be monitored. Notably, IBGE will report any uptick in furniture and automotive prices in late 2025.
Brazil will also announce a review schedule. Under Decree 8058/2013, AD duties are reviewed typically at 2-year intervals and sunset after 5 years unless extended. The first substantive milestone will likely be early 2027, when companies can request an interim review or expiry review. Affected stakeholders (importers and foreign governments) could mount challenges at that point if they can argue that circumstances have changed or that harm is limited. Meanwhile, Domestic foam producers may explore alternative feedstocks or adjust formulations to manage polyol shortfalls and cost increases.
In summary, the new anti-dumping duties mark a protectionist shift for Brazil’s PU supply chain. They will bolster the lone domestic polyol maker in the near term, but at a price: higher costs and potential supply tightness for foam users. The measure rebalances trade flows (likely reducing U.S./China exports, redirecting to other sources) and is emblematic of Brazil’s recent tougher stance on chemical imports. Monitoring will focus on trade statistics, commodity prices, and any legal countermeasures.
Given these unpredictable dynamics, access to accurate, real-time market intelligence has become essential. PUdaily’s Pricing Intelligence Service helps industry participants anticipate shifts, benchmark prices, and make better-informed procurement and sales decisions amid the uncertainty.
