Brazil steel producer Gerdau halted operations at five mills as a result of a weak demand in the country’s domestic market, according to news reports this week.
Steel production was interrupted in the cities of Araucaria, Parana state; Simoes Filho, Bahia; Curitiba, Parana; Sorocaba and Agua Fundo, both in the state of Sao Paulo, local media reported.
“Reduction in workplace was the last resource adopted by the company after a series of measures it took to avoid it,” the company said in a statement.
According to media reports, two Gerdau units were operating at 40 percent of their capacity. Altogether, their production could reach 1 million mt of steel, about 4 percent of Gerdau’s total steel production in world.
Gerdau said the idling is temporary and will resume as steel demand in Brazil increases, but the company will continue attending clients normally. An increase in steel imports was also cited as a reason behind the move.
Recently, at the Alacero conference in Mexico City, Andre Gerdau Johannpeter, CEO at Gerdau, said Brazil is not growing.
At that time, the executive forecast local production was expected to decrease in 2014 by 2 percent, while domestic sales and the country’s apparent consumption were thought to reach a 3 percent decrease, respectively.
For 2015, local production, domestic sales and the apparent consumption are expected to increase by 3 percent to 11.3 million mt; 1.4 percent to 9.9 million mt and 1 percent to 11.6 million mt, respectively.
Johannpeter said the country’s capacity utilization reached its lowest level since 2005.