Brazilian steel exports threaten local industry

Brazilian steel exports threaten local industry

With the Brazilian steel producers who currently concentrate on selling their products abroad rather than into the domestic market, with the purpose of benefiting from the advantageous exchange rates, the stock levels of the domestic steel stock distributors are running down gradually. At the moment steel exports are booming in Brazil leaving the local distributors worried about the seriously lowered stock levels compared to levels of last year. According to reports, the cold rolled steel stocks are down to 58'000 tons i.e., down by 45%, a number that meets only a ten days consumption of the country. The Brazilian currency Real has suffered a depreciation of almost 60%against the US$, leading the Brazilian producers to fix their prices in US$ no matter how difficult the situation becomes for the local consumers of steel. On top of the September price hikes effected by the Brazilian producers, there is another price rise announced by CSN, Cosipa and Usiminas on flat steel products to come into effect in November. This forthcoming rise is expected to increase the domestic availability by creating a balance between the domestic and export prices, although the September rise has hardly been absorbed by the domestic buyers. Steel consumers particularly located in the northern and north eastern regions are mostly effected by the delivery shortages due to their distance from the steel producing areas in the southeast. As a result most of steel consuming industries are looking to speed up their imports from Venezuela, Asia and Eastern Europe in order to avoid any possible interruption in their operations. After privatisation in 1990s, Brazil has got into a restructuring and modernization process in order to become competitive in both domestic and international markets, closed down uncompetitive firms and cut down costs while increasing production. The country invested more than $10 billion by the year of 2000.