Credit rating agency Moody’s said on Monday political uncertainty and a recent truck driver strike in Brazil may delay what it called a “more sustainable recovery” for the local steel sector.
In a report emailed to SteelOrbis, the agency said Brazil’s steel industry is “set to keep turning around, however more slowly.”
“In the first half of 2018, crude steel production expanded by 2.9 percent from a year earlier, flat steel production by 7.4 percent, and long steel production by 5.7 percent, while apparent consumption grew by 9.3 percent,” the report said.
“But the May 2018 trucker strike and political uncertainties have delayed a more sustainable recovery,” the agency added.
Brazil’s three main steelmakers, Gerdau, Usiminas and Companhia Siderurgica Nacional (CSN) have all “cut costs and adjusted their operations.”
“Higher steel prices will help the steelmakers offset milder demand in the second half of 2018,” Moody’s said.
While Gerdau’s Brazilian operations will still struggle with weak domestic infrastructure and construction, Usiminas and CSN are likely to take advantage of a “moderate expansion as automotive demand rises and industrial production picks up,” Moody’s said.