Average export prices for Brazilian flat steel have decreased 30.53 percent, year-on-year, from an average of FOB $910.65/mt (depending on the product) to FOB $632.63/mt in March this year, according to data released by the nation’s ministry of development, industry and foreign trade, MDIC.
Sources say the price decline is a combination of the excess of supply with lower production in producing countries like Brazil.
“The steel segment was always a volatile market. When the economy gets better, steel mills increase production volumes until the moment you have an inflection in the market to see economies like China slowing down,” a Sao Paulo-based trader said.
The source also attributed the decline in iron ore prices, which fell more than half in March to an average price of FOB $47/mt, as a driver for lower export prices for flat steel.
“In general, most steel prices have fallen. Heavy plates and all other carbon steel products have seen some price decrease,” the source commented.
A Brazilian source noted HRC export prices in particular have declined to an average current price of FOB $410-420/mt, compared to FOB $510-520/mt in the beginning of the year, but prices are now expected to be stable.
“HRC is perhaps the least affected product in terms of price decline, but even this one has experienced some decreasing,” the source said, adding Brazilian domestic prices for the product vary greatly as mills “negotiate on a case by case basis, depending on the client.”
As for the current quarter, a Brazilian trader expects prices to remain stable.
“I don’t believe prices will decline much more than what we have now. That’s a very competitive cost level for mills and I expect prices to keep stable in Q2,” the source added, noting any improvement in the US or China’s economy could positively change the prospects for the product.