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With the expansion of the plant, which receives hot-rolled coil steel from ArcelorMittal’s Tubarão unit for coating, the company will also reduce the volume of exports of HRC, Eduardo Zanotti, the company’s commercial vice president for flat steels, said at a press conference before the official launch in São Francisco do Sul, Santa Catarina.
“We will stop exporting one product to sell [another] with added value in the domestic market,” he said.
Representing one of the company’s largest recent investments in the country, 2 billion Reais ($347 million) have been applied since 2021 in the Vega cold mill complex project to increase cold-rolled, galvanized and Galvalume coil production.
The unit will also start producing Magnelis (ArcelorMittal’s steel coil coated with zinc, aluminum and magnesium) and will be the company’s first unit outside Europe to build this material. The capacity of the plant was expanded from 1.6 million tonnes per year to 2.2 million tpy.
Fastmarkets’ weekly price assessment for steel hot-dipped galvanized coil import, cfr main ports South America was $680-700 per tonne on Friday November 8, unchanged week on week.
Meanwhile, Fastmarkets’ price assessment for steel coil Galvalume import, cfr main ports South America was $750-765 per tonne on Friday, narrowing upward from $740-765 per tonne on November 1.
Zanotti highlighted that since 2020 the company has been importing Magnelis from Europe to serve the Brazilian market, and today there is already a customer base created for this product in the country.
Although the plant is entirely dedicated to supplying the Brazilian domestic market at first, the executive also stressed that, if the opportunity arises, the company will consider selling Magnelis steel to other regions of Latin America that show interest in the product.
According to Sandro Sambaqui, general manager of ArcelorMittal Vega, the unit has already reached 80% of its operational capacity, with around 500,000 tpy of steel. “The pace is very well planned, and the performance is in line with what we expected,” he said.
“The plant was born with environmentally friendly technologies, with natural gas, hydrogen and nitrogen,” he added. “Magnelis is also decarbonizing because it extends the life of steel exposed to nature, especially in solar farms and silos.”
Last week, during the company’s third-quarter earnings call, ArcelorMittal executives said they were optimistic about the Vega facility’s galvanizing expansion in Brazil.
ArcelorMittal estimates that this project will add around $100 million in earnings before interest, taxes, depreciation and amortization (EBITDA) after ramp-up, an effect which could be felt already in 2025.
“We are very pleased with the ramp-up of the facility, it’s been done at a record pace, I would say,” the company’s chief financial officer Genuino Christino said during the call.
Despite the excitement about the investment, the flow of imports arriving in the country still worries the company, according to Zanotti.
“There was indeed a measure by the government to have a quota plus tariff model, but there has not yet been a reduction in imports… but it is progress, it is a step,” he said. “Predatory imports were, in fact, harming the Brazilian steel industry.”
The executive also highlighted the decision of the Santa Catarina state government to withdraw import tax benefits on the region, taken on Friday.
The Santa Catarina government used to offer tax benefits to companies operating in foreign trade, as long as these companies used the state’s ports and airports to carry out their customs clearance.
But in a decree published in the official gazette on Friday, the state government said cold-rolled, hot-dipped galvanized coil, Galvalume and materials made of zinc, aluminum and magnesium coating are no longer part of the special regime of the national tax on goods (ICMS).
The products excluded by the measure were defined by the Mercosur Common Nomenclatures 7209.16.00, 7209.17.00, 7209.18.00, 7210.49.10, 7210.61.00 and 7210.69.11.
Since Friday, some market participants noted that the decision would likely benefit ArcelorMittal, the region’s leading steelmaker, and the producer of the main products affected by the measure.
“There was sensitivity from both the federal and state governments to create these mechanisms and eliminate conditions favorable to the simple steel import,” Zanotti said. “We expect this import to decrease over time,” he added.
The Vega expansion in Brazil was expected to absorb part of the volumes of coated and cold-rolled products that were being purchased abroad by Brazil, ArcelorMittal Flat Steel Latin America chief executive officer Jorge Oliveira told Fastmarkets in January.
Jorge Adelino, vice president of operations at ArcelorMittal, highlighted that the company is also evaluating other investments in the country as part of its plan to invest 25 billion Reais in Brazil by 2028.
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