Brazil’s apparent consumption of long steel is expected to reach 10 million mt in 2015, according to figures released on Tuesday by an executive from ArcelorMittal.
According to Jefferson de Paula, head of Long Carbon Central and South America at ArcelorMittal, Brazil’s apparent consumption of long steel has been stable in the past few years.
Apparent consumption of long steel has been oscillating in recent years, reaching 11.2, 11.4, 11.9, 11.1 and 10 million mt in the years of 2011, 2012, 2013, 2014 and 2015, respectively.
De Paula said Brazil will only reach the 11.3 million peak of 2013 in 2021, due to the current bearish projections for the country’s GDP, which is expected to decline 2 percent this year.
As for long steel imports, the executive forecast external purchases of the product are likely to reach 1.5 million mt in 2015.
The ArcelorMittal executive also said Brazil should add by 2016 a 3.2 million mt long steel capacity, as new projects from companies like Sinobras, CSN, ArcelorMittal and Simec, are expected to be completed.
“We have an apparent consumption of 10 million mt in the domestic market and we’ll be adding other 3.2 million mt of capacity. But we the capacity to produce 16 million mt of long steel, but our domestic market needs 10 million mt of the product. We now have a 6.1 million glut of capacity and operate at just 60 percent of our capacity,” he said.
“How can a company be competitive operating at 60 percent of its capacity?” the executive asked.
De Paula said the nation’s long steel market “will continue suffering” for a period of five years.
“The companies are becoming broken. We’ll need to work with a low capacity level at the mills, which is difficult, since we need to have competitive costs to compete in the global market,” he said, while referring to the export market.