Latin American economic analysis August 1, 2005
Brazil leads a plethora of economic news with the steel industry taking front and center in several key events.
Brazilian
iron ore producer Cia.
Vale do Rio Doce announced it will retain its right to sell excess
production from steelmaker Cia. Siderugica Nacional.
The largest iron producer in the world, CVRD is currently in the midst of an antitrust probe. Nevertheless, CVRD is digging in it heels and refusing to budge on a 20-year concession it has to sell any ore CSN does not use.
Last week it was reported that
Brazils crude steel output declined 1.2 percent in the second quarter of 2005. Total output for the first half was about 16 million metric tons. Several factors contributed to the drop including diminished demand from the farm machinery manufacturers and
construction industry.
Meanwhile Brazilian stocks are still mending after the drubbing they took last week. The Bovespa index tanked more than 3 percent amid fears about the political crisis currently embroiling the government. However, throughout last and early this week stocks were still rising amid perceptions that the crisis has started to fade slightly.
And indeed, the stock market has now finally surpassed the point at which was on June 3 when the crisis first began in earnest. Several stocks, particularly
Vale and Usiminas, have seen heavy
trading as of late with each rising 1.95 percent and 4.19 percent respectively.
Chile reported the highest level of business confidence in five months among a survey of 524 businesses. Overall, the monthly indicator rose nearly two points to 61.66.
Confidence was further buoyed by reports by surveyed miners that
production rose last month. The indicator among miners surveyed rose over 17 points to its highest level since the Chilean central bank began keeping track in November 2003.
In
Mexico it has been reported that borrowing costs have dropped quickly in step with falling inflation.
As of the end of June,
Mexico had managed to reduce inflation to 4.33 percent from 5.43 in November 2004. As a result, consumer confidence has jumped and yields on 20-year debts have fallen off their high of 11.18 in April.
It is widely expected that Banco de
Mexico will cut the lending rate by the end of the year after raising them 12 of the past 13 times.
In currency news, the peso continues to be strong against the dollar but weakened slightly earlier this week falling 0.2 percent to 10.6145 per dollar.
The Brazilian real rose 1.3 percent against the dollar.
The Chilean peso fell 0.03 percent to 561.45 per dollar.
The Argentine peso was unchanged yesterday at 2.8590 per dollar.