Footwear exports feel the impact of the trade war11/11/2019
Influenced by the trade war between the two largest global powers, the United States and China, Brazilian footwear exports decreased in October. Data prepared by the Brazilian Footwear Industries Association (Abicalçados) indicates that 10 million pairs were shipped last month. They generated USD 80.57 million, a 14% decrease in revenues and an 8.3% decrease in volume in relation to the same month of 2018. Therefore, exports totaled USD 798.87 million and 93.35 million pairs in the ten months of the year, 0.6% and 4% increases, respectively, in comparison with the same period last year. Abicalçados executive president, Haroldo Ferreira, assesses that exports to the United States have been following an upward trend as a result of the imposition of local import tariffs for Chinese shoes; however, the Brazilian product lost market share to other important international customers which were spawned by the Asian products.
Even though both countries have been negotiating to end the stalemate, the world is still feeling the effects of the trade war, especially due to the recent artificial devaluation of the yuan (Chinese currency), which made the Asian product even more competitive. Furthermore, over the year, Chinese footwear exports to the United States decreased by 3%, that is, over USD 260 million in products that needed to be reallocated to other markets all over the world, the leader explains. In addition to the impact of the trade war, Ferreira highlights the continuation of the Argentine crises and the adjustments of the exchange rate. The latter made the average price of Brazilian shoes decrease by 24% in the three past months, from USD 10.60 to USD 8. That is, exporters were able to lower the average price, in dollar, without risking their profitability. The fact, in statistics, has an influence in the decrease of the values generated by shipments,” he evaluates.
The main destination of Brazilian shoes abroad is still the United States. In October, 945.7 million pairs were shipped to that country, generating USD 14.74 million, a 10.5% increase in volume and a 17.4% decrease in revenues in comparison with the same month in 2018. With this result, over the ten months, North American companies totaled the imports of 9.88 million pairs of Brazilian shoes, generating USD 165.16 million, 35.2% and 30.4% increases, respectively, compared to the same period last year. The second destination of Brazilian shoes is Argentina, which imported 1 million pairs for USD 9.76 million last month, 25.3% and 13.6% decreases, espectively, compared to the corresponding period in 2018. Over the ten months, Argentines totaled the imports of 8 million pairs for USD 86.9 million, decreases both in volume (-25.5%) and in revenues (- 31.2%) in relation to the same period last year. France ranks third. In October, 584.68 thousand pairs were shipped to that country for USD 3.53 million, increases both in volume (16.5%) and in revenues (13.3%) in relation to the same month of 2018. With the result, throughout the year the French imported 5.9 million pairs for USD 45.77 million, 1.8% and 1.5% increases, respectively, in relation to the same period last year.
Rio Grande do Sul: the largest exporter
The state of Rio Grande do Sul is still the main footwear exporter. Over the ten months of the year, companies in that state shipped 25 million pairs that generated USD 365.84 million, a 9.8% increase in volume and a 2.1% increase in revenues in comparison with the same period in 2018. The second largest exporter during the ten months was the state of Ceará, from where 31.77 million pairs were shipped. They generated USD 192.73 million, a 1.7% decrease in volume and a 1.1% increase in revenues in relation to the corresponding period last year. São Paulo ranks third during the period. The state shipped 6.37 million pairs for USD 86.65 million in the ten months, a 6.6% increase in volume and a 2.3% decrease in revenues in comparison with the same period in 2018. Highlight since the beginning of the year, the state of Paraíba ranks fourth, with 15.66 million pairs shipped for USD 54.2 million, increases both in volume (20.2%) and in revenues (14%) in relation to the same ten months of 2018.
Imports keep increasing. In October, Brazil received 2.45 million pairs, for which USD 35.58 million were paid, 25.2% and 25.6% increases, respectively, in relation to the same month last year. With the result, over the ten onths, imports totaled 24.67 million pairs and USD 324.55 million, 3.9% and 6.7% increases in comparison with the same period last year. "We also felt the effect of the trade war in imports, since China has been selling
more to Brazil, despite the additional anti-dumping tariff, Ferreira assesses, stressing that the Chinese "play with the exchange rate" to compensate for the USD 10.22 surcharge per pair. China has an international reserve of over USD 3 trillion, almost ten times that of Brazil. It enables them to more easily move the exchange rate, he adds. Between January and October, Vietnam was the main origin of shoes imported by Brazil ,
with 10.5 million pairs and USD 161.45 million, decreases both in volume (-1.6%) and in values (-5.3%) in relation to the same period in 2018. The second origin during the period was Indonesia, which sent 4.26 million pairs to Brazil for USD 68.33 million, increases both in volume (23.7%) and in values (23%) in relation to the same period in 2018. The third origin was China, which shipped 7.27 million pairs to Brazil for USD 42.24 million, 2.7% and 31.4% increases, respectively, in relation to the same ten months last year.
In footwear parts – uppers, soles, heels, insoles etc. – pieces that amount to USD 25.67 million were imported, 39.8% less than in the same period last year. The main origins were China, Vietnam, and Paraguay.