A Sao Paulo-based distributor told SteelOrbis that a 5 to 10 percent price increase for long products and structurals in the domestic Brazilian market was yet to come in the next round contracts, although Gerdau and other steel mills usually raise prices by 7 percent.
The recent performance of some long product prices in the global market plus the weakening of Brazil’s Real made local steelmakers, including Gerdau, CSN and ArcelorMittal, to become more confident to increase prices domestically.
However, according to sources, wide flange beam profiles are now being sold domestically among distributors at FOB BRL 2,350/mt ($877/mt), while in October 2014, the same product was being sold in a price range of FOB BRL 2,630- 2,641/mt ($981-985/mt).
Sources attribute conflict in price trends to Gerdau dominating much of the long steel distribution chain, leaving a few or no space for local distributors, sources tell SteelOrbis. “They own the long steel distribution chain, and there’s no space for other competitors,” said a Sao Paulo-based trader.
According to sources, the competitiveness of long steel distributors is limited to the extensive reach of companies like Gerdau and ArcelorMittal. “There are many mills that work as distributors,” said one source. “They reduce the price of a product at the mill and sell it to a good price to its subsidiary. They are basically making dumping in the market.”
In 2005, Gerdau, Belgo-Mineira (Belgo Bekaert Arames) and Barra Mansa were accused and condemned by Brazil’s anti-trust authority (Cade) of making a cartel with wire rod prices.
At the time, Cade determined the three companies to pay a fine, which accounted for 7 percent of their gross sales.
$1 = BRL 2.68