The Brazil Steel Institute (IABr) reported Wednesday that while Brazil's domestic steel consumption and production will register a drop in 2009 when compared to 2008, a strong recovery is expected in 2010.
Although steel activity has resumed growth in recent months, for 2009 as a whole, production and consumption of steel and Brazil are expected to total 18.8 million mt and 26.7 million mt, respectively, representing respective decreases of 21.9 percent and 20.8 percent compared to 2008. Exports, estimated at 9.5 million mt, should rise slightly, though generate revenue 36 percent lower than 2008 due to lower international prices in 2009.
For 2010, IABr predicts steel consumption in Brazil will grow 21.6 percent to 22.9 million mt, while exports will rise 16 percent to reach 11 million mt, resulting in a net increase in crude steel production of 24.2 percent, to 33.1 million mt.
IABr said the significant improvement in sector performance predicted for 2010 reflects the momentum of Brazil's economy and consumer sectors, as well as the first effects of the beginning of the activities related to various special programs, with emphasis on petroleum and gas projects, the World Cup and the Olympics. Additional demand for steel generated by these special programs is expected to reach eight million mt from the period of 2009 through 2016, and the resumption of delayed investments in expansion projects during the period should result in higher export levels as well.
Regarding the world market, IABr said steel consumption has resumed growth in recent months but at levels lower than observed in Brazil. China's consumption is estimated to grow 18.7 percent in 2009 while apparent consumption worldwide is estimated at 1.1 billion mt, 24.3 percent lower than last year. For 2010, expectations for the global market are also positive, with worldsteel expecting a growth in consumption of 9.2 percent to 1.2 billion mt.
IABr said that there are still some uncertainties about the recovery of some large markets, though the main concern for the industry remains the large surplus of capacity in relation to global demand.