Brazil’s flat distributors reduce inventory levels in October

Inventories at Brazilian flat steel distributors and service centres declined by 12,000 tonnes in October compared with the previous month, to 937,000 tonnes.

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This volume represents 2.3 months’-worth sales, down from 2.7 months’-worth of sales in September, local association Inda said on Thursday November 22.

“If the market was balanced and running at high operating rates, this inventory-to-shipments ratio would be supportive of pricing power,” Barclays Capital analyst Leonardo Corrêa told Steel First.

Inda members sold 401,000 tonnes of flat steel products in October, up by 13% month-on-month, while purchases increased by 14%, to 389,000 tonnes.

Demand for heavy plate in the Brazilian market was slightly better last month, but inventories were still high, Corrêa said.

Shipments of heavy plate amounted to 43,100 tonnes, which represents a 17% increase compared with September’s levels, while distributors’ purchases went up by 28%, to 49,000 tonnes.

Heavy plate inventories corresponded to 4.3 months’-worth of sales in October, at 185,000 tonnes.

Inda expects stable purchases of flat steel products for November, while shipments are predicted to decline by 7% month-on-month.

Flat steel sales are estimated to come to 4.37 million tonnes for the whole of 2012, compared with 4.29 million tonnes in 2011, the association said.