According to André Gerdau Johannpeter, Chairman of the Gerdau Group, as reported by the Brazilian press, the industry's idle capacity is at 35 percent, which poses risks to its viability. He noted that an ideal idle capacity range would be between 15 and 20 percent.
Johannpeter identified key factors contributing to these challenges, including increased steel imports at lower prices, decreased domestic demand for steel products, geopolitical conflicts, commercial disputes, and prevailing uncertainties.
Referencing data from before the pandemic, he stated that Brazil imported approximately 2.2 million mt of steel annually, accounting for 10 percent of domestic consumption. Currently, imports have risen to 6.3 million mt per year, now making up 22 percent of domestic consumption, resulting in lower prices, reduced domestic demand, and higher unsold stock levels.
He indicated that the coming weeks will be important for assessing whether actions by government authorities related to foreign trade will align with the expectations of the Brazilian steel industry.
He also acknowledged that local industry stakeholders have differing perspectives, with steel producers advocating for stricter measures against imports, while steel consumers support access to lower-priced steel products.