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As 2026 begins, it promises to be an eventful period in Brazil. A presidential election will take place, which typically affects multiple sectors of the economy, with construction being one of the most impacted.
The “Minha Casa, Minha Vida” (MCMV) program — the Brazilian government’s housing initiative, which has mobilized around $140 billion-145 billion in total since 2009, according to government data — plays a structural role in the dynamics of Brazil’s construction sector and in supporting demand for key industrial inputs such as steel and aluminium.
Now, there is also the newly launched “Reforma Casa Brasil” program, which focuses on helping families living in urban areas improve their housing conditions and is active for the first time ever in an election year.
Combining the housing programs, around $39.8 billion will be invested in 2026 in total.
“The government’s efforts have been focused on building a broad housing policy that addresses the needs of families identified through key housing deficit indicators and ensures that no one is left behind,” Jader Filho, Brazil’s minister of Cities, said in an exclusive interview with Fastmarkets on Tuesday January 6.
According to data from the Ministry of Cities, Brazil’s current housing policy combines $1.6 billion in federal budget resources, $30.5 billion from the FGTS — a mandatory severance fund financed by employers’ contributions — and the Brazilian Social Fund, as well as an additional $7.4 billion from the Social Fund and Caixa Econômica Federal, the state-owned development bank, earmarked exclusively for the Reforma Casa Brasil initiative.
In the first three years of the administration, concluded at the end of 2025, the Ministry says it has already reached the target originally set for the full four-year term, with 2 million units contracted under the MCMV program. From now until the end of 2026, the goal is to contract an additional 1 million units.
The program currently accounts for roughly half of new housing launches in the country, generating a direct and material impact across the entire construction supply chain.
The government expects to deliver more than 100,000 housing units in 2026 under the subsidized MCMV lines alone — excluding financed lines — out of the 170,000 units currently under construction. Overall, including both subsidized and financed programs, more than 1 million housing units are under construction nationwide.
“The expansion of the MCMV program supports the development of several productive chains, such as steel and aluminium, which are widely used inputs in the program. In addition, MCMV contributes to greater demand stability and predictability, as it is a nationwide program with continuity and scale, supporting longer-term planning across the industry,” Filho told Fastmarkets.
The Ministry of Cities is also responsible for urban infrastructure policies, particularly in areas where cities can play a role in addressing climate-related challenges. In this context, projects related to urban mobility, basic sanitation and disaster prevention are also part of the Ministry’s planning.
Against this backdrop, the Ministry has selected several proposals under its new growth acceleration program, the “Novo Programa de Aceleração do Crescimento” (Novo PAC), a federal initiative that channels public investment into infrastructure, totaling $20.7 billion for the implementation of structural projects across these three areas nationwide.
More than $11.1 billion will be invested in basic sanitation alone. In urban mobility, the ministry has selected $9 billion in projects ranging from the purchase of buses and rail vehicles to the implementation of dedicated lanes, light rail systems, metro lines, smart traffic signals, urban trains and cycle paths. In the area of disaster prevention, $723.2 million has been allocated to selected projects and resumed works for slope containment.
“Novo PAC and several programs under the Ministry of Cities, such as MCMV, help sustain investment levels, employment and construction activity even in periods of heightened economic volatility,” Filho said.
Nevertheless, Brazil’s benchmark interest rate (Selic) may still act as a barrier to investment and financing, as it has stood at 15% — the highest level in nearly two decades — since June 18. The rate was set by the Central Bank of Brazil’s monetary policy committee and has been maintained for four consecutive meetings.
The Ministry of Cities, however, states that programs such as MCMV, by operating with funding sources such as the FGTS and offering interest rates significantly below those prevailing in the market, reduce the sector’s exposure to fluctuations in the Selic benchmark rate.
In addition, there are widespread expectations for a reduction in the Selic benchmark rate during 2026, sources have said. The next meeting of Brazil’s monetary policy committee is scheduled for January 27 and 28.
New rules for home financing under Brazil’s Minha Casa, Minha Vida program came into effect on January 2, expanding access for lower-income families. The changes were approved in December by the FGTS Curator Council and are aimed at adjusting the program to rising housing and construction costs.
Under the new framework, the maximum property value eligible for financing was increased for families in income brackets 1 and 2 — those earning up to 4,700 Reais ($875) per month. The updated price ceilings vary according to city size and region, with limits of up to around 255,000-270,000 Reais in larger urban centers.
The government expects the changes to expand access to housing credit and support new residential developments, particularly in regions where higher construction costs had previously limited the viability of projects.
Economists consulted by Fastmarkets broadly agree that Brazil’s construction sector may find some support in 2026 but stress that the outlook remains uneven and highly sensitive to macroeconomic conditions. Expectations of lower interest rates, housing programs and public investment coexist with concerns over fiscal constraints and a slowing economy, limiting visibility for a stronger recovery.
From an industry perspective, comparisons with recent years remain challenging, Lucas Bressan from the Federation of Industries of the State of São Paulo’s (FIESP) Construction and Mining Industry Department (DECONCIC) told Fastmarkets on December 16.
According to Bressan, after an exceptionally strong performance in 2024, supported by public investment and government programs, the sector entered a period of deceleration in 2025, shaping a more cautious baseline for projections into 2026.
“In the first and second quarters [of 2025] there was a slight decline, followed by a recovery in the third quarter, which was already expected. Overall, growth in 2025 was modest,” Bressan said.
Looking ahead, Bressan said housing programs remain a central pillar for construction activity, particularly segments linked to lighter materials such as aluminium and residential demand. In this context, policy changes aimed at expanding housing credit could play a more visible role in 2026.
“Minha Casa, Minha Vida helps the market a lot. Aluminium materials, which are lighter structures, are especially important for housing, for example in window and door frames,” he said, citing changes to housing credit rules, the launch of Reforma Casa Brasil and additional funding for MCMV, with potential effects expected in 2026.
FIESP’s initial projection for construction growth in 2026 was 1.7%, but revisions now point to rates as high as 3.3% under a more optimistic scenario, Bressan said, supported by an expected increase in housing credit availability and targeted government programs.
A more cautious tone, however, was voiced by Gustavo Bertotti, head of Equities at Fami Capital, focusing on broader macroeconomic and financial conditions. Concerns around fiscal sustainability, household indebtedness and weak industrial momentum continue to weigh on expectations for private investment and construction demand, he said.
“Demand for steel has been declining, and Chinese steel has been putting pressure on governments to adopt some form of protection. In my opinion, 2026 tends to be a year of caution, despite the election period,” Bertotti told Fastmarkets on December 19. “The recent rise in the stock market does not reflect a real improvement in the economy. It was driven much more by foreign inflows into emerging markets.”
Bertotti highlighted fiscal risks as a key source of uncertainty, noting that rising public debt and limited spending flexibility undermine confidence and long-term planning. He also said that interest-rate cuts, while expected, are unlikely to be sufficient to unlock a strong recovery in construction.
“The discussion is more about timing. Interest rates will come down, but they will remain extremely high,” Bertotti said.
He added that although some construction companies have performed well in equity markets, fundamentals remain weak, with margins under pressure and a heavy dependence on government-backed financing mechanisms.
“I don’t see a clear recovery in construction. Household indebtedness continues to rise, and even with lower interest rates, the impact on housing finance is not that relevant in a macroeconomic environment full of problems,” Bertotti said.
“If business owners don’t have positive expectations, they hire less, invest less and buy less steel,” Bertotti added. “Against this backdrop, economic agents tend to pull back, and demand from the construction sector is unlikely to grow enough to contribute to a meaningful improvement in the industry.”
A more intermediate assessment was offered by economist André Doca, who sees room for gradual improvement in 2026, supported by public investment and housing policy, but without the conditions for a strong expansion cycle.
“Despite expectations of lower interest rates throughout 2026, growth in the sector should remain moderate, since the expected decline in rates is still very gradual and real interest rates remain very high in Brazil,” Doca said.
Doca added that prospects vary significantly across construction segments.
“Infrastructure tends to be the main driver, supported by Novo PAC and social infrastructure funds. In housing, MCMV helps sustain the popular and mid-range segments, but the real estate market outside these programs feels the high cost of credit much more,” he said.
Market sources from the steel and aluminium sectors said expectations for Brazil’s construction sector in 2026 remain mixed, shaped by the legacy of high interest rates, elevated property inventories carried over from 2025 and the uneven timing of demand recovery across different stages of building projects.
According to sources from the aluminium market, slower property sales in 2025 resulted in higher inventory levels entering 2026, which are expected to weigh on new project launches, particularly in segments more sensitive to financing conditions.
In 2025, the aluminium billet market remained stable amid a more competitive supply environment.
One Brazilian aluminium extrusion source commented on the factors shaping property inventory levels at the end of 2025.
“[The year 2025 ended] with high inventory levels, mainly because high interest rates have inhibited property sales,” the source said.
The same source added that inventory levels have also been influenced by the pace of project deliveries, particularly in major urban centers, where construction activity remained strong despite weaker sales.
“São Paulo, in terms of residential construction and, to a lesser extent, commercial projects, has effectively turned into a construction site. There are many projects under way, and this tends to increase inventories,” the source said.
On the other hand, a Brazilian aluminium trader source noted that construction-related materials demand does not necessarily move in line with property sales, because consumption tends to occur later in the construction cycle.
“Aluminium profiles only come in at the final stage. So [in 2026], as projects move toward completion, demand linked to construction should start to pick up,” the aluminium trader source said.
Fastmarkets’ fortnightly assessment for aluminium 6063 & 6060 extrusion billet premium, ddp São Paulo was $520-550 per tonne on December 30, narrowing downward from $520-560 per tonne on December 16.
Meanwhile, Fastmarkets assessed the fortnightly aluminium P1020A premium, low-VAT market, delivered São Paulo region at $220-250 per tonne on Tuesday January 6, stable since November 11.
The corresponding aluminium P1020A premium, high-VAT market, delivered São Paulo region was assessed at $105-130 per tonne on Tuesday, stable since December 9.
On the steel side, expectations of a lower benchmark interest rate and recent updates to government housing programs have made market participants slightly more optimistic.
“The government has increased the amount of credit available for housing finance. This is expected to lead to an improvement compared with 2025. Overall, the year should be somewhat better, with less pressure on margins,” a steel distributor source said.
Even so, this optimism is largely based on comparisons with 2025 — which industry participants describe as a negative year.
“For long steel products, frankly, there is no room for price increases [from mills to distributors]. If any adjustments occur, they will depend on the needs and strategy of each mill. In addition, mills need to pass those increases on to construction companies, and no one wants to lose customers because of higher prices,” the same steel distributor added.
Fastmarkets’ monthly price assessment for steel reinforcing bar (rebar), domestic, monthly, delivered Brazil was 3,200-3,600 Reais per tonne on December 12, unchanged month on month. In December 2024, prices were 4,080-4,210 Reais per tonne.
“Our rebar sales were 20% lower this year due to the construction sector,” a second steel distributor source told Fastmarkets at the end of 2025.
Even so, steel consumption in Brazil is expected to increase in 2026. According to estimates from Aço Brasil, apparent consumption is forecast to reach 27.005 million tonnes in 2026, up by 1% compared with the association’s estimate for the end of 2025.
Despite this, the broader domestic backdrop — including the recent escalation in tensions involving the US, Venezuela and their allies — continues to create uncertainty for construction sector players.
“In the south [of Brazil], a businessman from the construction sector has been finding many lots available for construction. He told me: ‘I haven’t stopped investing, but I would like to be investing much more. I have much bigger plans than what I have already done, but I won’t invest now. I don’t know what 2026 will look like,’” a steel trader source said.
But some Brazilian steel industry participants have noted a potential opportunity for investment as Trump turns his eyes to Latin America.
“Brazil, as the largest power in Latin America, is clearly on Washington’s [radar]. The current situation could turn positive, as the US is already structuring investment and low-interest financing programs for Venezuela,” the steel trader source added. “Brazil could benefit from this, as US companies may rely on Brazilian steel for construction projects.”
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