Credit rating agency Moody’s said the outlook for Brazil’s steel industry within the next 12 to 18 months, or early 2020, is “stable,” adding that it expects a “soft rebound” of industrial confidence, with a falling, but still “relatively high” steel inventory.
Moody’s also said quarterly EBITDA for local steelmakers Companhia Siderurgica Nacional (CSN), Gerdau, and Usiminas should increase, due to higher prices and a marginal growth in steel demand.
Moody’s said the rebound for the local steel sector was anticipated for early this year, but it has been “slower than expected.” The agency said it does not expect a substantial recovery in steel industry confidence and consumer confidence following October’s presidential elections.
Trade wars in the steel sector, including protectionist measures by the US and increased competition from steel producing countries like China and Turkey should diminish Brazilian steel exports.
Moody’s said it could change the industry’s outlook from “stable” to “positive” once steelmaker profitability reaches over BRL 600/mt, among other things.