Brazil’s steel industry is facing its toughest year yet. According to André B. Gerdau Johannpeter, chairman of Brazilian steelmaker Gerdau, the sector is in an existential crisis - pushed to the brink by rising imports, global trade barriers, and dangerously high idle capacity. Without decisive action, he said, Brazil risks the demobilization of its domestic steel production, a blow that could reverberate across the entire industrial supply chain.
Rising imports threaten domestic producers
Mr. Johannpeter highlighted that imported steel’s share of domestic consumption has surged dramatically. The penetration rate of these imports, which was previously around 10 percent, now stands at 22-25 percent of steel demand. Most of these imports come from China, where state support and lower costs allow exporters to undercut Brazilian producers.
Excess idle capacity
Brazilian steelmakers are operating at 35 percent idle capacity, compared to the 20 percent level considered manageable. This means that plants are underutilized, making it nearly impossible for companies to remain competitive.
Geopolitical and trade pressures
In addition to imports, geopolitical conflicts and the imposition of international tariffs are squeezing Brazil’s steel sector further. These challenges erode profitability, restrict market access, and make it harder to compete on a global scale.
Johannpeter described 2025 as the most turbulent year in recent history for Brazil’s steel industry. With imports surging, idleness rising, and international conditions deteriorating, he warned of the real risk of extinction for domestic steel production.
In addition, Gerdau plans to lay off 400 workers as it prepares to cease cylinder production by year-end. In protest, on September 15 employees at Gerdau’s Pindamonhangaba facility in the state of São Paulo commenced a strike action, as SteelOrbis previously reported.