Termomecanica eyeing South America as next step in exports drive

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Wednesday, August 16, 2017

Brazilian copper and copper alloy product manufacturer Termomecanica (TM) reported an 18% year-on-year increase in shipments during H1 and is now looking at South America as a crucial region for more export growth, according to an executive.

Termomecanica's export manager Marcelo Silva told BNamericas that the region as a whole is becoming increasingly important to the company, and he cited Paraguay, Chile, Peru, Colombia and Uruguay as the firm's next targets.

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According to Silva, sales to South America, especially Argentina, represents an important share of exports for the company, due to the transactions between TM's affiliates. He also pointed out that TM's distribution center in that country has been crucial for the increase in sales, benefiting both distributors and direct sales.

In the region, the company has the distribution hub and a plant in Argentina, as well as another plant in Chile.

"The fact that we're closer to our customers has enabled us to improve our services and speed up deliveries, thus helping our customers to reduce their inventory. This proximity also allows us to expand the product mix and brings us an important competitive advantage over our competitors," Silva said.

EXPORT PUSH

In 2010, TM's export volume was 1.7% of the company's total sales and since then, according to Silva, this level has evolved year by year.

"The company has maintained annual export growth above two digits. Undoubtedly, with the domestic market still depressed, exports are alternatives to reduce idleness at plants and keep up the pace of output. The current [BRL-USD] exchange rate and [government] benefits, such as the Reintegra tax rebate program, are factors that also favor export results," the executive added.

For Silva, TM's export volume is expected to reach about 20% of the company's total sales by the end of the year.

Currently, the US is TM's main consumer market abroad, acquiring 50% of the company's total exports.

SPECIAL ALLOYS

As part of its strategy to push exports, in late July, TM unveiled an initiative aimed at boosting new manufacturing processes and promoting the use of copper and its alloys through the encouragement of technological research.

"Lately, we have observed a trend in demand for high-performance alloys - which are expected to be reliable products with a stable and long-lasting performance - for the naval, automotive and aeronautics industries," the company's director of industrial operations, Luiz Henrique Caveagna, told BNamericas at the time.

"The development of special alloys thus fulfills the company's strategic need to increase its market share in foreign markets," Caveagna added.

TM ranks among the largest Brazilian manufacturers of finished and semi-finished non-ferrous metals products.