Steel distributors' H1 sales forecast to fall 10-15%

Brazilian steel distributors' sales slid 10-15% in the first half of this year compared to the same period of 2002, according to forecasts from sector association Inda. "Between January and April, sales by steel distributors totaled 700,000t, 5% less than the same period the year before. Despite May figures still not having been released, preliminary estimates suggest an even larger downturn for the month," Inda VP Andre Zinn told BNamericas. "Sales of some products dropped more dramatically, like hot-rolled products and thick plates, which posted a fall of 15-30% [in the first half]. In compensation, other types of steel like galvanized products grew 50%," Zinn said. The drop in sales is directly related to the federal government's "recessive" economic policies, especially the use of high interest rates to curb inflation, he said. "The higher the interest rates, the smaller the investments and therefore less steel consumption," the Inda official said. But the second half of this year is expected to experience an upturn in the market. "Everything indicates that there will be a recovery in H2, if the government cuts interest rates, China starts to buy again and the large economies begin growing again as is being forecast. The outlook is to finish the year at practically the same level as in 2002 when 4Mt were sold," Zinn said.