Steelmakers complain about the “lack of protection” for Brazilian steel after the invasion of imports

Brazilian steelmakers did not have a positive second quarter and – on top of that – see an additional factor playing against them: steel imports. With demand falling around the world and the faltering Chinese economy, global manufacturers of the product have been increasing their sales to Brazil, given the “lack of protection” of the local industry.

The steel segment in Brazil is not very hot, as well as that of China, the main buyer of this product in the world, with the reopening frustrating, highlighted JP Morgan analysts. In addition to the impact on revenues, this scenario leads to additional pressure on costs, generating less dilution of expenses and reducing the margins of Brazilian steelmakers.

“There is weakened demand. We are looking at some factors with concern, such as high interest rates and the import of finished products, which has increased significantly”, said Marcelo Chara, executive director (CEO) of Usiminas, in the company’s conference call, held a week ago.

On the 3rd, it was CSN’s turn to mention excess facilities for steel imports.

“The pressure from imports made our lives very difficult. It was not easy to hold prices down, but we are seeing an improvement in the second half”, commented Benjamin Steinbruch, CEO of Companhia Siderúrgica Nacional.

Soon after, the executive defended that trade defense is not something illegal. “It is a non-existent protection in Brazil. It is something that needs to improve a lot. Every country has it,” said Steinbruch.

Foreign steel producers took advantage of the weaker real and the low price of steel on the foreign market, as a result of low demand, to gain space in Brazil.

The chart below shows Brazil’s flat steel imports measured in TEUs between Jan 2019 and May 2023. The data is from DataLiner.

Flat steel imports | Jan 2019 – May 2023 | TEU

Source: DataLiner (click here to request a demo)

Steelmakers see invasion of imports
According to data from the National Institute of Steel Distributors, from January to April the volume of flat steel imported by Brazil increased 18.5% in the year, to 659.5 thousand tons.

In April this number jumped 46.7%, reaching 161 thousand tons. China was the biggest seller for the Brazilian market, with 55% of sales.

According to the executives of the two companies, the Chinese metallurgists are operating with negative margins – and impossible to beat.

The two national competitors hope that in the second half, however, that the situation will improve.

“Although production in the first half of the year was quite high there, they will restrict production in the second half of the year to fight pollution again. In addition, the margin of the Chinese industry operates negative, practically unsustainable”, commented the CEO of CSN, also mentioning the hope of stimuli in China to diminish the arrival of steel from abroad to Brazil.

Source: Infomoney

To read the full original report, visit: www.infomoney.com.br/mercados/siderurgicas-reclamam-da-falta-de-protecao-ao-aco-brasileiro-apos-invasao-de-importados/

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