Steel and Aluminium

Steel: Exports should be 6.7% lower than in 2018

Dec, 05, 2019 Posted by Sylvia Schandert

Week 201950

The national steel industry should end the year with a 6.7% drop in export volume (13m tons) and a 2.1% increase in imports (2.5m tons). The estimate was presented today (12/05) by the Aço Brasil Institute, which also indicates that domestic sales will have a lower result than in 2018 by 18.5m tons.

In terms of apparent consumption, which considers sales of local companies and imports, a total of 20.7m tons is expected to be traded, which means a decrease of 2.4% compared to the volume registered last year.

The institute’s executive president, Marco Polo de Mello Lopes, explained that the year had an unfavorable start for the sector. “The first half was very bad. I would say that the economy ruined the expectations of those who had hoped for a more vigorous recovery,” he said, recalling the environmental crime of Brumadinho (MG) as one of the negative impacts.

Over the next five years, Aço Brasil expects companies in the segment to invest US$9bn over the next five years.

Another challenge facing the sector is the utilization of the installed capacity of the currently underutilized Brazilian steel industry, around 64% of the total available. For Lopes, the ideal would be to use at least 85% of the installed capacity. To reach this condition, production would have to reach 9.5m tons, which would be able to generate 203,863 direct and indirect jobs.

According to the institute’s executive president, optimism about the future is associated with developments in the country’s socio-political context. Lopes cited the recovery of construction and infrastructure as factors that could improve the segment’s performance. Another bet is on expanding the industry’s participation in the oil and gas and renewable energy sector.

United States

When asked about US President Donald Trump’s signaling to overcharge Brazilian steel, Marco Polo de Mello Lopes said contracts already signed with US customers are being enforced, but new negotiations are suspended due to the climate of “insecurity”.

“All of us who are following closely have been surprised, because President Trump’s reasoned positioning is devoid of any technical sense. The claim that Brazil manipulates its exchange rate is meaningless. It has no point in saying that the American farmer is harmed. Agriculture has nothing to do with steel,” he said, noting that, for him, the steel market has been living with “predatory practices.”

Earlier this week Trump said in his Twitter account that Brazil and Argentina are promoting a devaluation of local currencies and overvaluation of the dollar hurting US producers. For this reason, the US president said he plans to restore tariffs on steel and aluminum purchased from these countries.

Source: Agência Brasil

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