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Metal Bulletin’s weekly price assessments for rebar and wire rod exports out of Latin America, including Brazil, were both unchanged on Friday May 26 compared with May 5, at $440-450 per tonne fob.
Traders attributed this price stability to difficulties in selling volumes in the export market.
Early in May, Brazil-based long steel producer Gerdau urged the Brazilian government to update the so-called Reintegra programme to increase the competitiveness of local steel products in the external market.
The plan grants industrial companies tax credits equivalent to a percentage of their exports.
“The Reintegra programme would improve companies’ profitability in the export market,” Gerdau ceo André Gerdau Johannpeter said on May 4. “On average, our export profitability has been very low, but sometimes the margin was negative.”
Gerdau continues to export, however, despite the adverse market conditions, in order to keep its mills operating, as the domestic steel demand in Brazil remains weak. “Otherwise, we would have to cut production levels and close units,” Johannpeter added at the time.
But the current devaluation of the Brazilian currency against the US dollar, as a result of the continuing political crisis in the South American country, could favour export movements in the short term as it increases the competitiveness of domestic goods in external markets, according to local sources.
The Brazilian Real was trading at 3.24 Reais to $1 on May 31, against 3.17 Reais to $1 on April 28, according to Brazil’s central bank.
The poor consumption levels in the country have also contributed to keeping import volumes at very low levels.
Brazilian long steel import volumes fell by 5.40% year-on-year in April, according to the latest figures released by national foreign trade ministry MDIC.
Imports of non-alloy long steel goods reached 15,944 tonnes, down from 16,855 tonnes in April 2016.
Over the same period, rebar imports in Brazil declined by 17.71%, to 1,221 tonnes, while imports of wire rod were down by 49.68%, to 1,418 tonnes.
Meanwhile, Metal Bulletin’s monthly price assessment of domestic rebar in Brazil was steady month-on-month on May 5, at 3,250-3,410 Reais ($997-1,046) per tonne delivered.