The recovery of Brazil's steel sector depends much on the country's ability to export, as domestic demand remains sluggish, the nation's steel association, IABr, said this week, while releasing its production and domestic sales forecast for the ending year.
A topic widely discussed at the Alacero conference in Rio this year, the reestablishment of the Reintegra (a pay-back export tax program), was once again brought to attention by IABr.
"IABr understands that it is urgent the compensation of the non-competitiveness of the Brazilian steel as compared to the other countries, with the increase of the Reintegra rate to 5 percent, as forecast in the second paragraph of the law 13.043/2014," the association said at a press conference.
IABr also called for a stronger stimulus over the country's policy regarding local content, which sets the minimum proportions for certain products that must be built mostly in Brazil. Brazil's steel association also argued China should not be recognized by Brazil as a market economy.
IABr said Brazil's crude steel production in 2016 should reach 30.7 million mt, 7.6 percent down, year-on-year, the country's lowest production rate since 2009. Domestic steel sales in 2016 should decline 10.1 percent, year-on-year, to 16.3 million mt, same level seen in 2009. Brazil's apparent steel consumption in 2016 is expected to reach 17.9 million mt, 16.2 percent down, year-on-year.
As for 2017, IABr anticipates apparent steel consumption to rise 3.5 percent, year-on-year, while domestic sales are expected to increase 3.6 percent in 2017, year-on-year.
Recently, Alacero forecast slightly different projections for Brazil, when compared to those IABr released this week.
Alacero said Brazil apparent steel consumption in 2016 should reach 18.2 million mt, 14.4 percent down, year-on- year. As for 2017, Alacero forecast Brazil steel consumption to rise 3.8 percent, year-on- year, to 18.9 million mt.
"The intensity of fall in the performance indicators of Brazil's steel industry is diminishing, which allows us to say that the worst may be gone. However, the new [projected] scenario doesn't guarantee a vigorous recovery of the industry in a still difficult scenario due to the convergence of structural and conjunctural factors," IABr said.