58 | Focus on South America
customer markets. “But we do sell abroad, including in Asia,
Mexico, the US, and even Europe these days,” said Mr Berneck. “The volumes to Europe are considerable – 4,000 – 5,000m3
per month, to countries such
as Portugal, Spain, Poland and even Germany. Freight rates are the most determining factor. Europe is not a place we imagined we would be selling but it was an opportunity and the freight rates are aligned.” Mr Berneck said the price of electrical energy, the Ukraine war, and availability of raw materials in Europe were additional reasons for being competitive. Looking at the Brazilian economy itself, Mr Berneck said volatile conditions meant only very short-term forecasting was possible. “We are not currently able to project any further than a month ahead with any kind of accuracy. Here in Brazil, we’re very well trained to live with uncertainty, so we are very flexible and nimble in that sense. “This year we expect to reach about 15.5%
interest rates, the highest level in about 20 years. We are currently at about 14%.” Mr Berneck’s said the current Brazilian administration’s ‘Big Government’ philosophy was not the ideal solution for industry development and believes potential stagflation conditions were building in Brazil. What he calls the government’s unco-
ordinated way of dealing with the economy was likely to lead to recessionary conditions. The contrast with Argentina – where there are aggressive moves to curb inflation and reduce the size of government – were stark, added Mr Berneck.
The company is expecting demand for panel products to be entering a weaker cycle. “Last year we had a weak beginning for 2024, then we had a very robust second semester, mainly because the president is trying to inject money into the economy. We also had a huge flood in the south of the country, which damaged millions of houses, and this helped increase the demand a little bit, but we are seeing an end of this now. “I think that things are a little bit worse because our currency has devalued, the price of food has increased tremendously and the official inflation rate – claimed to be 5.5% a year – is hard to believe.” The rise in basic consumer costs is a hindrance to consumption, with a decreasing volume of general sales activity reported in the country. “All the producers [in the panels industry] are producing at around 85% capacity utilisation rate, in my opinion,” commented Mr Berneck. “We had a nice January; February was OK
and now in March we have seen a decrease, and I think it is a trend and we’re observing a very fast deterioration of the economy.” The subject of new US tariffs came up in
our conversation. At time of writing, tariffs of around 25% stood to be levied in April on Brazilian wood product exports to the US. Mr Berneck said several panel producers sell a lot of PB and MDF products to the US, with lumber, plywood and cellulose also representing significant volumes. “Even though we don’t have a significant amount of products sold to the US, there is the indirect impact due to the wood industry
[customers] selling there. If we sell our products to Asia or Mexico, then many of the finished products end up in the US, so there is going to be an impact.” The company hopes that Brazil’s industry associations will lobby to defend the wood products sector’s interests and negotiate. A tariff of 25% is at a level that could preclude sending products to the US market – including mouldings and plywood for the housing industry.
Summarising the position of the Brazilian panels industry, Mr Berneck said producers had learned to live with the difficult market conditions stretching from the end of 2022 to H1 2024. Reduced production, lower staffing levels, and streamlining of operations have been implemented widely. Therefore, panel sector investment potential looks weaker than it did a few years ago. However, Berneck’s long history, expertise,
innovation and low debt levels have created a strong resilience in its business. “We are family-owned and we have a nice cushion of liquidity, which always helps in these hard times. All the family members invest only in our business and not anything else. That’s what we believe in, and we will keep doing.” Additionally, Berneck’s forest ownership
gives it control of half its raw material input, giving an edge on some competitors. “We have a renowned product in the
market and people pay a premium in certain instances. “We will keep investing in different production processes to improve the quality of our products.” ●
Above: Berneck’s Lages plant is the most recent to be constructed WBPI | April/May 2025 |
www.wbpionline.com
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