Steel and Aluminium

Gerdau Steel President Urges Action as c Surge in Brazil

Nov, 07, 2023 Posted by Gabriel Malheiros

Week 202342

Gustavo Werneck, the President of Gerdau, a leading steel company, spoke at a press conference on Tuesday (7th) and expressed concern over the increasingly dire situation faced by steel producers in Brazil due to a surge in steel imports, with the majority coming from China.

According to Werneck, the volume of steel imported by Brazil surged by 58% from January to September this year, reaching 5 million metric tons. When considering indirect steel imports, the total is expected to reach 10 million metric tons.

The executive mentioned that China is “flooding” the Brazilian market with steel, which is sold at prices below the cost of production in Brazil. “It’s steel that doesn’t comply with the recommendations and norms of the World Trade Organization,” Werneck stated.

The chart below – developed with DataLiner data – shows Brazilian steel imports (hs 7326) from Jan 2020 and Sep 2023.

Steel imports from China | Jan 2020 – Sep 2023 | TEU

Source: DataLiner (click here to request a demo)

Gerdau, alongside other steel producers, is advocating for an increase in the tariff on steel imports from 12% to 25%. Werneck emphasized that the 25% tariff is the same as the one implemented by Mexico, a country with similar conditions to Brazil. “The government must take short-term measures,” he said.

The influx of foreign steel is already causing layoffs and reduced production capacity in Brazil. Werneck disclosed that Gerdau has already laid off 700 employees in the country and has temporarily shut down three plants. “We will continue to experience further reductions in capacity if nothing is done,” he warned.

These cutbacks have affected plants nationwide, except for the Ouro Branco (MG) unit. In addition to layoffs, some workers are on leave, and there have been temporary job suspensions.

Gerdau reported a 5.3% decrease in steel sales in Brazil in the third quarter of this year compared to the same period last year. Year-to-date, there is an 8.5% decline, totaling 3.88 million metric tons.

Meanwhile, steel production remained stable, with a 0.2% decline for the quarter, totaling 1.28 million metric tons. However, production has fallen 9.1% year-to-date, reaching 3.98 million metric tons.

Werneck also noted that the historical average of 25% of steel exports produced by Gerdau in the country is not being met because there is no market willing to purchase domestic products “as China has flooded the world with subsidized steel.”

Source: Valor Econômico

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