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Brazilian steel association revises down production sales and consumption forecasts

Brazil’s steel industry association IABr revised down its production, sales and consumption forecasts for 2014, as negative systemic factors impact the sector’s competitiveness and affect its main customers.

The association said it expects crude steel output to average 33.3 million tonnes in 2014, down 2.5% on last year. The figure compares to IABr’s previous forecast of 5% annual growth released earlier this year.

Mr Marco Polo de Mello Lopes CEO of IABr said that “Just a few times in the past we saw the steel industry facing such a difficult and delicate moment.”

The CEO blames the country’s usual suspects a high and cumulative tax burden, power costs and an overvalued local currency in addition to global steel overcapacity of 600 million tonnes per year.

As a consequence, Brazilian steel exports are expected to remain below historical levels, imports at extremely high levels and installed capacity utilization below 70%, the association said, adding that domestic sales are forecast to reach 25.3 million tonnes this year, down 4.1%, based on the decline seen on the first seven months. Meanwhile, the association sees the country’s steel imports growing 1.8% this year to 3.8 MT.

Mr Mello Lopes said that “As long as Brazil’s competitive asymmetries and the global steel surplus question are not resolved, we will continue to see our producers facing a hard time domestically and internationally. As we are far from seeing any resolve on the tax reform issue or better exchange rate measures coming from the government, the steel sector urges for an effective trade defense policy, including the implementation of local content standards.”

Source – Business News Americas


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