Panel SA: Monthly readjustment in asphalt price after Petrobras mega-increase warns construction sector

In addition to the advance in the price of a barrel of oil, which also boosts the price of asphalt, the alert level of heavy construction companies has risen because the readjustments of the input for the works will be monthly, instead of quarterly. According to Petrobras, the new frequency starts in April.

The sector has been considering halting earthworks in the country since the announcement of the mega-increase in fuel prices, announced in early March by the state-owned company.

“It is increasingly unsustainable to maintain ongoing contracts. We cannot absorb a cost of this size. Either companies stop the work, or reduce the pace or break”, says José Carlos Martins, president of the CBIC (Brazilian Chamber of Construction Industry).

According to Carlos Eduardo Prado, manager of Sinicesp (the heavy construction industry union), importing asphalt as an alternative to domestic production is complicated because it requires ample storage capacity, in addition to releasing the product in accordance with the technical specifications required by Brazil.

He claims that the sector studied bringing asphalt from Russia in bulk, but had to give up because of the war.

To try to mitigate the impact of the increases on the costs of earthworks, the sector has negotiated with the federal government ways to anticipate the readjustment of the contracts of service providers with the government, which is done annually.

“Contracts have a delay in applying the index. It gets in the way of companies’ economic and financial planning, and there’s no way to refund the money at the speed at which it is spent. You have to buy today, paying more, and wait months to get this money and rebuild. It’s a snowball”, says Prado.

Joana Cunha with andressa Motter and Ana Paula Branco