STEEL CONSUMPTION IN BRAZIL DROPS BACK TO FIGURES OF ONE
DECADE AGO AND EXPORTING IS THE ONLY SHORT-TERM SOLUTION
thThe Brazil Steel Institute held, on June 08 and 09, in São Paulo, the 27 Brazilian Steel Conference, gathering
about 500 attendees, including players of the steel industry, government, metal mechanical chain
industries, banks, consulting firms, academy, members of parliament and the press. The conference
opening ceremony was graced by the São Paulo State Governor, Geraldo Alckmin, the Executive Secretary
of the Ministry of Industry, Foreign Trade and Services, Fernando de Magalhães Furlan, and the First
Secretary of the Chamber of Deputies, Deputy Beto Mansur.
Against the backdrop of the economic recession in Brazil and the adverse international steel market
scenario, speeches and debates throughout the conference mainly addressed the harsh situation of the
Brazilian steel industry which is enduring the worst crisis of its history.
The combination of cyclical and structural factors significantly impaired the steel-intensive industry
activities, thus strongly impacting the internal demand for steel products and deepening the persistent
deindustrialization process in the country.
The forecasts of the apparent steel consumption for 2016 amount to 18.2 million tons, a threshold of 2006,
that is, one decade backwards. In this scenario, the only short-term solution is to export. That was the main
conclusion drawn at the 27th Brazilian Steel Conference.
Over the conference, the aggravation of the steel industry crisis was underlined. After a staff drop-off of
29,740 people over the 2014 and 2015 span, the industry estimates are to close the first half of this year with
about 11,300 dismissals. Five blast furnaces are shut down. The Brazilian steel industry currently operates
under 60% of its installed capacity, the lowest level reached to date, directly impacting the companies'
result. To resume its historical level of 80%, the output has to be incremented at about 8 million tons.
However, it is capital that exports keep sustainable. Despite the increase of 40% in exports over the last
year, the revenue decrease reached 3.3%. Therefore, Brazilian steel needs to be internationally
competitive. This competitiveness setback, only considering the financial cost and tax and charges, amounts
to more than USD 60/t steel. The return of the Reintegra tax rate (Special Regime for Reintegration of Tax
Amounts for Exporting Companies) was advocated by processing industry players attending the event.
Other widely discussed issue in the conference concerns China, which holds more than half of the
worldwide surplus installed capacity (440 million tons), and has been keeping the pace of exports at 130
million tons upon subsidized and farfetched prices. A consensus was reached that China cannot be
recognized and a market economy.
APERAM SOUTH AMERICA
ARCELORMITTAL AÇOS LONGOS
COMPANHIA SIDERÚRGICA NACIONAL - CSN
GERDAU AÇOMINAS S.A.
GERDAU AÇOS ESPECIAIS S.A.
GERDAU AÇOS LONGOS S.A.
SIDERÚRGICA NORTE BRASIL S.A. – SINOBRAS
THYSSENKRUPP CSA - CIA. SIDERÚRGICA DO ATLÂNTICO
VALLOUREC & SUMITOMO TUBOS DO BRASIL - VSB
VILLARES METALS S.A.
VOTORANTIM SIDERURGIA S.A.