Brazil's apparent steel consumption seen returning to 2007 levels

Bnamericas Published: Thursday, June 09, 2016

In what it calls the worst crisis in its history, Brazil's steel industry association IABr said it expects the country's apparent steel consumption to reach 18.2Mt this year, down 14.4% compared with 2015, and a level last seen in 2007.

The association has also revised down crude steel production forecasts - it expects output to fall 6.8% to 32.9Mt this year, and domestic sales are expected to reach 16.4Mt, a 10% drop compared with 2015.

"The figures reflect the convergence of cyclical and structural factors. In the current economic cycle, Brazil's political and economic environment was crucial to make steel-consuming sectors, namely, automotive, construction, and machinery and equipment, report successive drops in their results, substantially shrinking the domestic steel market," the association said.

"At the structural level, the maintenance of competitive asymmetries further highlighted the difficulties that the domestic industry historically had to face to compete with international producers," it added.

The association believes boosting steel exports would be a way to improve the levels of installed capacity utilization, which is currently around 60%, but the sector is currently contending with international overcapacity exceeding 700Mt, which has led to unfair trade practices and depressed prices.

"Moreover, local competitive asymmetries, mostly due to high financial costs and tax burdens, have not allowed companies to obtain financial returns from exports," the release said.

IABr is urging the government to bring back the original format of the Reintegra tax rebate program, which was designed to bolster local manufacturers by reimbursing them 5% of the value of exports. Currently, the rate is just 1%.

In addition, the steel industry wants interim president Michel Temer's government to introduce agile and effective trade defense mechanisms and to deny China, the world's biggest steel producer and exporter, a market economy status.


IABr said Brazilian crude steel production slipped 13.2% year-on-year to 12.3Mt in January through May. Domestic steel sales in the first five months totaled 6.7Mt, down 18.4% compared with the same period in 2015

Apparent domestic steel consumption reached 7.4Mt, down 25.8% from January-May 2015.

Home to steelmakers such as Gerdau, Usiminas and CSN, Brazil is Latin America's biggest steel producer.


Subscribe to the most trusted business intelligence platform in Latin America. Let us show you our solutions for Suppliers, Contractors, Operators, Government, Legal, Financial and Insurance.

Subscribe to Latin America’s most trusted business intelligence platform.

Other projects in: Mining & Metals (Brazil)

Get critical information about thousands of Mining & Metals projects in Latin America: what stages they're in, capex, related companies, contacts and more.

  • Project: Itinga
  • Current stage: Blurred
  • Updated: 2 weeks ago
  • Project: Vermelho
  • Current stage: Blurred
  • Updated: 2 weeks ago
  • Project: Luanga
  • Current stage: Blurred
  • Updated: 2 weeks ago
  • Project: Salinas
  • Current stage: Blurred
  • Updated: 2 weeks ago
  • Project: Corumbá
  • Current stage: Blurred
  • Updated: 3 weeks ago

Other companies in: Mining & Metals (Brazil)

Get critical information about thousands of Mining & Metals companies in Latin America: their projects, contacts, shareholders, related news and more.

  • Company: New Stone Mining Ltda  (New Stone Mining)
  • The description included in this profile was taken directly from an official source and has not been modified or edited by the BNamericas’ researchers. However, it may have been...
  • Company: Salobo Metais S.A.  (Salobo Metais)
  • Salobo Metais SA, a subsidiary of Vale SA, participates in the exploration, exploitation, processing, transportation and commercialization of metallic minerals, mainly copper an...
  • Company: Alcoa Alumínio S.A.  (ALCOA Aluminio Brasil)
  • Alcoa Alumínio, the Brazilian subsidiary of US aluminum giant Alcoa, produces primary aluminum, fabricated aluminum, and alumina. In addition to aluminum products and components...