With the weakening of domestic sales, Brazil steelmakers are looking to expand exports. According to executives from companies like Companhia Siderurgica Nacional (CSN) and Usiminas, the strategy of increasing exports would help steel mills to compensate weak domestic demand, and keep production levels at desirable rates.
Earlier this week, Usiminas CEO Julia Eguren told reporters at the Brazil Steel Congress, which has held in Sao Paulo from Tuesday to Wednesday, that domestic consumption was responsible for up to 91 percent of the company sales a few quarters ago, but now those figures should account for only 75 percent of sales.
Benjamim Steinbruch, CEO at CSN, has a similar thinking. He said the external market has been an option for the company to not stop producing. CSN has been using all of its 5 million metric tonnes (mt) capacity per year to produce steel.
For attendees in the congress, Brazil has been passing through difficult times, especially when it comes to the steel industry. “We hope we’ll not be cutting prices, because margins are tight,” said Steinbruch.
Earlier this week, the Brazil Steel Institute (IABr) released a weak forecast for the country's steel market in 2014.
According to IABr, Brazil production, sales and consumption will fall this year. Among the systemic factors that will be impacting the industry's competitiveness are the high and cumulative taxes, the cost of electricity and a strong US dollar.
In the global market there's still an exceeding capacity, which reaches about 600 million metric tons, it said. Exports will remain below average and imports will reach extremely high levels, making the use of the installed capacity remain below 70 percent.
IABr said crude steel production is expected to reach 33.3 million mt, down 2.5 percent year on year. Domestic sales should reach 21.7 million mt, down 4.9 percent year on year. According to IABr, Brazil apparent consumption should fall by 4.1 percent year on year to 25.3 million mt.