Usiminas Gains Most from Steel Trade Protection in Brazil
Brazil’s government recently raised the import tariff on steel to 25% for selected products, positioning Usiminas, Brazil’s largest steel producer, to potentially thrive.
As global trade shifts, this increase, targeting specific steel items, is set to significantly alter the competitive dynamics favoring domestic companies.
Usiminas, particularly dominant in the national market for rolled steels, sees this as an opportunity to recover from the heavy competition it faced from Chinese imports.
The Brazilian Foreign Trade Chamber’s Executive Management Committee (Gecex) not only increased the tax but also set import quotas.
In addition, these quotas are at 130% of the average volume from 2020 to 2022.
This dual approach aims to discourage excessive imports that surpass these limits, thereby supporting local producers like Usiminas.
In 2023, these new tariffs would have affected over half (54%) of Brazil’s imported steel plate volumes.
By March 2024, nearly 60% of annual quotas for these products were filled, signaling strong market impact from the policy.
The intense competition from Chinese steel, which grew by 30% over previous years, has put significant pressure on Usiminas, forcing temporary reductions in operations.
Marco Polo de Mello Lopes, CEO of the Brazil Steel Institute, starkly described the industry’s struggles as “dramatic.” He cited “unfair” practices by overseas competitors.
Itaú BBA predicts that new tariffs and quotas will significantly reduce the import parity premium from 22% to 8%.
This anticipated change should offer Brazilian steelmakers like Usiminas more room to adjust prices and possibly regain market share.
Revitalizing the Brazilian steel sector, and ensuring its resilience and continued growth, is the aim of this policy recalibration.
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