Brazil’s Steel Industry on the Brink as Imports Surge, Warns Gerdau

São Paulo, September 5, 2025 — Brazil’s once-robust steel sector faces an existential threat as cheap imports flood the domestic market and factory utilization plummets, according to André B. Gerdau Johannpeter, chairman of the board at Gerdau, one of the world’s largest steel producers.

In remarks published in Revista Oeste, Johannpeter painted a stark picture: steel imports—led by China—now account for nearly a quarter of Brazil’s consumption, up from around 10 percent just a few years ago.

Domestic mills are operating at just 65 percent of capacity, leaving more than one-third of furnaces idle and driving fixed costs to unsustainable levels.

“This is the most turbulent year for Brazilian steel in decades,” Johannpeter said. “If these trends continue, we risk the complete demobilization of our national steelmaking chain.”

Imports and Idle Capacity

• 4.1 million tonnes of steel were imported through July 2025, a 24.4 percent rise over the same period in 2024.
• China supplied nearly two-thirds of these imports, leveraging state subsidies to undercut local producers.
• Steelmakers target 80–85 percent plant utilization to cover capital costs; Brazil’s current 65 percent rate sits well below that threshold, with idle capacity nearing 35 percent—nearly double the healthy margin.

Pressure on Trade Defenses

Despite recent hikes in import tariffs, anti-dumping measures have failed to curb the influx, industry insiders say. Loopholes in enforcement and tariff quotas have allowed predatory-priced steel to continue undercutting domestic production.

A federal anti-dumping probe into Chinese hot-rolled steel has been under way since June, but no decisive action has stemmed the tide.

Broader Economic and Geopolitical Strains

Brazil’s steelmakers face headwinds on multiple fronts:

• Global Tensions: U.S. tariffs on Brazilian exports have disrupted trade flows, while shifting alliances in trade agreements leave Brazil vulnerable.
• Domestic Demand: High interest rates and sluggish GDP growth have dampened construction and manufacturing activity, further weighing on domestic consumption.

Stakes for Jobs and Infrastructure

The steel sector underpins employment for hundreds of thousands across mining, production, logistics, and fabrication.

A collapse of local capacity would imperil these jobs and expose Brazil’s infrastructure agenda to supply disruptions and currency-driven price volatility.

Steel also feeds critical downstream industries—automotive, heavy machinery, appliances, and real estate development. “Without a stable domestic steel base, every major infrastructure and industrial project faces higher costs and greater uncertainty,” warns an industry analyst.

A Call for Decisive Policy

Executives and trade unions alike are calling on Brasília to:

• Tighten enforcement of anti-dumping rulings and close tariff loopholes
• Offer targeted incentives for modernization and greenfield investments
• Forge strategic partnerships to diversify export markets

As Gerdau and peers shift capital toward better-protected markets abroad, Brazil stands at a crossroads: enact robust trade defenses and domestic support, or watch its historic steel industry become a relic of the past.

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