The Brazilian steel industry is ready to supply the country's strong demand for consumer goods for years to come, according to Marco Polo Mello Lopes, executive vice-president of Brazilian steel institute IBS.
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There is no need to worry about a possible shortage of steel in the market despite consumption growth and rising raw material prices, Lopes told reporters Thursday.
"The steel industry in Brazil is working with a capacity 60% above the current demand," he added.
During a press conference, Lopes said apparent consumption for steel manufactured goods in Brazil will be 13.7% higher in 2008 compared to 2007. At the end of last year, IBS was forecasting just a 10% increase.
Meanwhile Lopes said the industry in Brazil is expecting production growth of 11.4% this year, with semi-finished products accounting for 55.3% of the total.
IBS's long-range steel consumption projection for 2015 is 39.8Mt/y, or 213kg per capita versus 22.0Mt and 129kg per capita in 2007.
The figures represent significant growth by Brazilian standards but are still low compared to countries such as South Korea which consumes 1,051kg/capita, Spain at 696kg/capita and the United States at 424kg/capita.
THE DRIVERS
The most important consumption drivers pulling the economy in 2008 and in years to come will be the civil construction, automobile and capital goods sectors, Lopes said. In 2007, construction accounted for 30.0% of total steel consumption, the automotive sector 26.8% and the capital goods market 20.8%.
Rudolf Buehler, technical director at IBS, said the Brazilian auto industry's target is to produce 5mn vehicles per year.
"Recently, the auto industry in Brazil was asking if we in the steel industry were prepared to handle their needs," said Buhler.
Petrobras (NYSE: PBR), the country's federal oil giant, is also going to be become a major player as the company will need to order large quantities of steel for a tanker ship program.
During the period 2007-12, Brazilian steel consumption is expected to rise by an average 7.8% annually compared to the world's 4.8%. For the 2012-16 period, Brazil's steel consumption is forecast to increase 7.4% per year while global consumption is due to grow by around 3.6%.
"We have an optimistic message and are happy to say that we are in a period of sustained growth," said Lopes. "After 26 years of unaltered steel consumption we are now ready for this challenge."
