Bad First Half-Year in Brazil Steel Production, Expectations not Met

RIO DE JANEIRO, BRAZIL – According to the latest figures of the Brazil Steel Institute (Instituto Aço Brasil), raw steel production in Brazil slid by 1.4 percent to 17.2 million in H1 on a year-on-year basis.

Domestic sales were up 1.3 percent to 9.2 million tons. Exports were down 2.4 percent to 6.7 million tons, with revenue sliding 5.9 percent to US$ 4 billion.

“I would say it was a very bad first half, and expectations weren’t met,” Instituto Aço Brasil president Marco Polo Lopes said. According to him, steel production follows the economy, whose growth also fell short of earlier predictions.

Since the economy is sluggish, Lopes said the industry is turning to exports. “There is a great need to export. Brazil’s steel industry is exporting about 40 percent of its output. That is a lot, and it’s a result of a domestic market slump,” he said. Most of these exports are designed to meet the enhanced requirements of steel in China.

This scenario prompted the institute to revise its forecasts. As the year began, raw steel output was expected to be up 2.2 percent this year. The new projection is for a 0.4 percent increment, to 35.5 million tons. “It’s much less than we were expecting before, as a consequence of H1 performance,” Lopes said.

The forecast regarding domestic sales was slashed by nearly half, from 4.1 percent to 2.5 percent, the equivalent to 19.4 million tons sold.

Exports, which were formerly expected to be down 6.1 percent this year, are now seen decreasing 7.3 percent in volume and 12.4 percent in value, to US$ 7.7 billion.

Brazil is one of the five countries (Brazil, China, Korea, India, and Turkey), which together account for almost half of total steel production around the globe.