Brazil on the way to achieve its dream thanks to China
Brazil, largest economy in
South America, desired to be a power in steel industry for a long time. However, this dream of
Brazil was unattainable due to weak economic situation for almost a decade. Now, relying on piquant growth in Chinese economy together with rather strong steel demand from
China,
Brazil is in preparation to make both domestic and foreign
investments, as well as improving its trade relations with
China. According to information by Brazilian Steel Institute (BSI),
Brazil will be spending around $7.4 billion during 2004-2008 in order to expand crude steel
production capacity by 30%. Annual
production is planned to reach 44 million tons from current level of 34 million tons, securing full supply for the domestic market. It is reported that this investment for capacity expansion will be for existing works, instead of new ones. By the way, over 50% of the investment spending will be met by Brazilian steel producers' own resources while rest by foreign establishments, such as
Baosteel, Arcelor, Dongkuk and Danieli. On the other hand,
Brazil and
China took an important step in strengthening their trade relations by forming a non-governmental organization, China-Brazil Business Council, at the beginning of this week. Furthermore, two parties signed around fifteen agreements covering steel, coal and
automotive fields this week as reported by official press agency Xinhua.
Brazil hopes that similar attempts would help its economy to revive. Apart from mentioned developments,
Brazil is planning to partake in renewal of railroad and ports as well as
construction of a gas pipeline in
China. Additionally, world's largest
iron ore producer Brazilian CVRD made many and important agreements with
China alone, undertaking delivery of 35 million tons of
iron ore and other minerals to
China this year against $1 billion. In 2003,
China was ranked third largest trade partner of
Brazil, followed by the US and
Argentina. Chinese imports of
iron ore, iron and steel were worth $4.5 billion. Bilateral trade between two countries was recorded as $7 billion last year, up by 200% compared to 2000. Brazilian officials expect
China to take second place this year.