Sanctions against Russia could encourage the US to import more steel from Brazil

Economic sanctions imposed on Russia for its invasion of Ukraine may increase steel exports from Brazil to the United States.

“With the closure of [US-Russia trade] relations, a space will undoubtedly open up for our negotiations with the US concerning Section 232,” said Marco Polo de Mello Lopes, the executive president of the Steel Institute, on Monday (7).

Lopes also pointed out that Brazil is the largest exporter of steel slabs to the United States, followed by Russia. “Russia and Ukraine are major steel producers and exporters. However, with the constraints imposed by the effects of the war, it is clear that trade flows related to steel mills have inverted.”

Section 232 is a tool that former US President Donald Trump used to reduce steel imports. Brazilian exports are subject to quotas under the standard. The measure limited the sale of semi-manufactured steel products from Brazil to the United States to 3.5 million tonnes per year. Prior to the measure, shipments to the North American market totaled 4.7 million tonnes in 2017.

According to Lopes, the sector requests that Brazilian semi-finished steel exports to the United States be excluded from the quota system. “It makes no sense for the American industry – which requires slabs to produce – for Brazilian steel to remain within this restriction,” he said. He goes on to say that the issue has already been brought up in Brazilian diplomacy and that a mission should be organized to negotiate with US authorities.

If the restriction cannot be lifted, Brazil intends to request an increase in volume. “That’s where the Russia issue comes in,” the executive explained. According to him, the Slavic country exported 2 million tonnes to the United States in 2018, but there has been a decrease since then, owing to quotas.

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