LATIN AMERICA LONG STEEL WRAP: Brazil prices static through September on thin activity

The Brazilian long steel market continued to show only weak trading activity for both domestic and foreign sales during September.

And the slowdown has prevented mills from applying relevant price increases.

Metal Bulletin’s monthly price assessment for Brazilian domestic rebar was stable throughout the month, at 3,250-3,410 Reais ($1,027-1,078) per tonne delivered.

Potential price upswings that were expected at the end of September or early in October will be limited by the declines seen in the scrap market amid poor demand in Brazil, according to local sources.

Meanwhile, the lack of offers from Brazilian long steel producers in the international market has helped to constrain fluctuations in export prices in the Latin American region.

Metal Bulletin’s weekly price assessment for both rebar and wire rod exports in Latin America showed only one change during September, increasing to $560-565 per tonne fob on September 15 from $540-545 per tonne fob in the previous week.

An export offer from a Brazilian steelmaker for wire rod was placed in the global market at $560-565 per tonne fob in mid-September, but prices have risen due to positive market sentiment in line with higher prices heard internationally.

Although demand for long steel goods in the Brazilian domestic market is weak, export transactions have remained unattractive to mills because sales to foreign countries have been made only with extremely low margins, local sources said.

As a result, companies have been trying to prioritise sales to the local market rather than exports.

M&A
While long steel sales activity in Brazil was largely absent in September, consolidation in the sector was a live issue at the beginning of the month.

This was when a technical report was disclosed by the country’s competition regulator, Cade, in which it recommended refusing permission for the acquisition of local long steel producer Votorantim Siderurgia by ArcelorMittal’s Brazilian subsidiary.

The regulator’s technical section concluded that “the transaction would remove a relevant player in a sector in which the three largest companies are responsible for more than 80% of market supply”.

As a result, the acquisition would harm competition in the markets for at least eight products, including wire rod, rebar and merchant bar.

The report’s conclusion did not take market participants by surprise, as they had already commented on the possible consequences of the acquisition.

“I didn’t expect it to be approved without comment,” a Brazil-based source said. “Maybe companies will be forced to divest some assets for the purchase to be approved.”

Cade’s court will evaluate the proposed acquisition and will make a final decision by a date yet to be defined.


 

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