CSN alleges high costs and prepares another 15% adjustment

May, 19, 2021 Posted by Ruth Hollard

Week 202122

With rising costs driven by iron ore and scrap prices reaching record levels, Companhia Siderúrgica Nacional (CSN) will readjust prices again in June and July. The third-largest steelmaker in the country already applied an increase of 15% to 18% on May 1st. Now, according to a company source, the new readjustment will be another 15%, divided into two equal installments in the months of June and July.

The company produces hot and cold-rolled, zinc-plated, pre-painted steel, sheet metal, and rebar at the plant in Volta Redonda (RJ) and at facilities in Porto Real (RJ) and Araucária (PR). The arguments for the new increase continue to be the price increase for the main raw materials (iron ore, coal, and scrap), the high exchange rate (the dollar trading at around R$ 5.30), and the low premium (5%) in relation to the imported material placed in the country.

The hot-rolled coil in China is exported at US$ 1,011 per ton. Earlier this month, CSN applied 15% for rebar, 16% for hot-rolled, 16.5% for zinc-plated, galvanized, and pre-painted, 16.75% for sheet metal, and 18% for cold-rolled, according to company information.

Iron ore prices reached a record high last week, exceeding US$ 230 a ton in the Chinese spot market. On Friday, the price dropped to around US$ 200 a ton. However, this week, with heated steel sales in the Chinese market, the price of the raw material rose again and closed yesterday at the port of Qingdao above US$ 224 a ton (ore with 62% iron). The price of scrap metal has been rising this year, and last week it reached US$ 558 per ton.

The constant readjustments in steel prices in Brazil have caused steel product distributors to adopt a new commercial strategy. According to Carlos Loureiro, the executive president of the National Institute of Steel Distributors (INDA), companies must maintain a stock level capable of ensuring up to 2.5 months of sales in order to maintain a healthy margin. Before, the rule was 3.2 to 3.5 months of sales.

Source: Valor Econômico

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