A major distributor of long products in southeast Brazil told SteelOrbis that wire rod sales are affected by the reduced demand from large contractors, which are under investigation of corruption linked to the oil company Petrobras.
The source said that sales so far in the year went down by more than 20 percent, but this was already expected under the company sales program for the year.
But most recently the company is facing default in payments from some of its clients, which for their turn are having difficulties in receive payments by the works developed.
“We are having to postpone some deliveries to avoid the accumulation of debts by a single client,” the source said, adding that the problem is higher with contractors linked to housing and infrastructure works, usually commissioned by the government, but lower with producers of precast concrete parts, such as piles and structural items, with a more diversified range of clients.
In the domestic market, wire rod mesh is current sold at BRL3,140/mt ($997/mt), while the drawing grade product is sold at BRL3,511/mr ($1,115/mt), both CFR, full taxes conditions.
Such prices in BRL are stable since a 12 percent increase from 01 April, but reduced by five percent in $ due to exchange rate variation.
1 US$ = BRL 3.15