Chinese steel concerns: Brazilian importers warn of alleged fakes

Key takeaways:

• Reports from Brazilian importers allege widespread irregularities in Chinese steel imports including mismatched coatings (“head and tail” production), overlapping labels, altered chemistry (boron for HS code changes) and falsified mill certificates.
• These practices are distorting competition and pricing (often $30–$200/tonne cheaper), eroding trust and creating a “toxic” market; many buyers knowingly accept lower coatings and end-user safety risks emerge later through corrosion and failures.
• Proposed fixes focus on buyer testing and awareness (sub-$100 gauges), stronger standards and certification (Inmetro-like requirements, minimum AZ150 before nationalization) and targeted inspections/reporting since anti-dumping alone won’t solve the problem.

Irregular Chinese steel: Brazil’s market under threat

During October 2025, several participants in Brazil’s imported steel market contacted Fastmarkets to report what they describe as “fake” or “irregular” steel products coming mainly from China.

These materials, according to sources, arrive with coating and composition allegedly different from what is declared on the label, or with falsified mill certificates claiming higher quality than what was actually produced.

One trader said the issue is not new, but has reached “a level that is now structural.”

Allegations of irregular Chinese steel flooding Brazil’s import market

Several sources described different methods used to disguise the actual quality of the steel.

One of the most common, known as “head and tail”, consists of producing coils where only the beginning and the end – the “head” and “tail” – meet the declared coating level (AZ150–200), while the middle section is of lower quality (AZ40–60).

“When I was in China recently, a state-owned mill came to me and said: ‘We can send you a coil where the head is AZ200, the middle is AZ20, and the tail is AZ120.’ I told them my company doesn’t do that, but they said others do. This is real,” one Brazilian importer told Fastmarkets.

How Chinese steel allegedly disguises coating and quality

Other sources reported having seen two overlapping labels on the same coil – the lower one showing a low coating grade and the upper one marked with a higher grade. “One of the labels had an X handwritten over the AZ100, and on top of it, they stuck a new one saying AZ150. I think they forgot to hide it properly,” a distributor said.

According to market participants, these practices allow the sale of underpriced material while escaping detection due to Brazil’s lack of mandatory testing or inspection at ports.

Beyond coating inconsistencies, some market players report alleged chemical and documentation tricks used to bypass controls and taxes.

“I’ve heard that before; exports from China come in via other countries, but it’s hard to know what’s rumor and what’s real. Honestly, though, if it happens, it wouldn’t surprise me,” another trader said.

Label manipulation and falsified certificates tied to Chinese steel

They said that a frequent technique allegedly involves modifying the steel’s chemical composition, adding small amounts of boron to change its customs classification (HS code or Mercosur Common Nomenclature code) and reduce import tariffs.

According to some importers, falsified mill certificates are also part of the scheme. Besides a certain high-quality specification being ensured in the Material Test Certificate (MTC), the steel product’s quality itself does not match.

“The certificate can be manipulated. I once received an Excel file, and the guy from the mill said, ‘Put in whatever numbers you want and send it back to me, I’ll stamp it.’ It’s just a piece of paper,” one of the interviewees said.

The problem, according to most interviewees, is particularly serious in galvanized and Galvalume steel, used in construction, roofing and infrastructure. “Brazil does not focus on the quality, but focuses on the price. On selling more by lower prices,” a representative from a third trading company said.

Another importer said they have personally seen irregular production lines in China. “I saw a top factory, an average one, and a worse one there. You can tell right away they’re making AZ150 with 20 in the middle. It’s very clear, you can see it. But some clients want it,” they said.

Pricing distortions: Chinese steel undercuts and a “toxic” market

Fastmarkets’ weekly price assessment for steel hot-dipped galvanized coil import, cfr main ports South America was $610-660 per tonne on Friday October 24. This was unchanged from October 17.

The alleged practices by market participants distort competition and degrade market standards, sources said. “We’ve been seeing informal materials for years. In the case of Galvalume, here in Brazil, we only produce AZ150. Imported products come in many options. They say they’re importing 100, but when you look in the middle, it’s AZ20. It’s estimated that about 80% of the market was irregular,” a distributor active in the galvanized steel market said.

The weekly price assessment for steel coil Galvalume import, cfr main ports South America was $680-730 per tonne on Friday, also unchanged from the week before.

Sources said that Brazil’s structural focus on price over quality allows this practice to flourish.

“The big problem is that the end user doesn’t know about this,” one importer said. “They’re just asking for the lowest price, which is based on the fake coating price. That makes honest distributors unable to survive.”

Another source added that this dynamic has become systemic, with some distributors and importers knowingly ordering low-quality materials because “that’s what sells.”

Several participants emphasized that many buyers knowingly accept low coating levels, as end-users rarely measure zinc thickness or question certificates.

“The testing machine is cheap – anyone can use it – but few actually do,” one trader said.

The distortion has allegedly created what some described as a “toxic” market environment, where legitimate companies struggle to compete against fake material priced $30–$200 per tonne below market levels.

“We can’t compete with that,” one trader said. “You either give up the inquiry or you sell at a loss. The serious brands are losing ground because of fraud. It’s destroying trust.”

Regional actions vs. Chinese steel in Brazil

According to several importers, the practice has become “the new normal” in Brazil. And even as neighboring countries like Peru and Colombia have already taken steps to limit such irregularities.

“Three or four years ago, Peru was the worst for fake coatings,” one source explained. “Now, Peru, Chile and Colombia have started to clean up. Not 100% clean, but on the way to this. Only Brazil keeps doing this without concern.”

Safety risks and end-user awareness

The irregular material not only undermines fair pricing but also represents a safety concern, sources said. “The end users start to know because you need to change the roof tile, spread out for 10 years, just in one year or two years,” one importer said.

In some cases, the problem becomes evident only after corrosion or product failure occurs. “Many won’t even measure it; they won’t know. They’ll only notice it after a few years,” another importer said.

Interviewees proposed several measures to address the problem. And suggested starting with awareness campaigns and verification equipment for buyers.

One trader said that low-cost thickness gauges, costing under $100, could be used by end users to verify the coating of galvanized coils. “The little machine is cheap – you can test everyone’s material. People who care should have this zinc coating test,” they said.

Policy and enforcement pathways for Chinese steel

Sources also said that industry associations and institutions could help. “Aço Brasil or other associations could provide these measuring devices, since they’re not expensive. It would be a way to prevent problems and ensure that consumers can verify the steel,” another interviewee suggested.

Executives also advocated for stronger regulatory standards, similar to those used for rebar certification. “There should be something like an Inmetro for coated steel — if the coating is below 150, it shouldn’t be allowed to enter the country. That would solve a large part of the problem,” one source said.

Inmetro is a federal agency under Brazil’s Ministry of Development, Industry, Commerce and Services (MDIC). It was created to promote economic competitiveness, as well as the safety and quality of products and services. It establishes conformity assessment programs to verify whether products and services meet the required standards, also responsible for measurement and standardization.

Sources said that the issue cannot be solved through anti-dumping measures or quotas alone. Instead, they proposed targeted quality control and consumer awareness campaigns.

“We need to let the end users know and teach them to check the coating,” one participant said. “There are affordable devices, under $100, that can measure zinc layers. If associations or institutions provided those for free, or even promoted a campaign, it would change the mindset.”

Regulatory inspection and certification proposals

Others defended a more regulatory approach, suggesting inspection mechanisms at ports or certification requirements similar to the “Falcon Bauer” system used for rebar.

“If the government required all coated steel to meet at least AZ150 before nationalization, we wouldn’t have this issue,” a source said. “But importers won’t push for it – it’s good for too many people that things stay the way they are.”

Another source added that it’s unrealistic to expect authorities to inspect every shipment.

“I don’t think that the government can verify all the material that arrives here,” one importer said. “But if an end user identifies fake material, there should be a channel to report it and punish whoever’s responsible.”

Market dynamics and stakeholder responses

Participants agreed that while some Chinese mills are allegedly complicit, the main demand for fake material comes from Latin American buyers themselves.

“Seventy percent of the time, it’s the importers or distributors who ask for low-quality products,” one trader said. “They already know what they’re buying – they’re not being fooled.”

Others pointed out that this dynamic mirrors broader structural weaknesses in Brazil’s steel trade – from tax loopholes to informal import practices.

Fastmarkets contacted The Brazilian steel Association Aço Brasil and the Brazilian Steel Distributors Association (INDA) for comment on the issue. Both entities declined to comment.

“As of this moment, we haven’t received any official inquiries on the matter, so we prefer not to comment on it. We will wait for future statements on the topic,” INDA representatives said.

Fastmarkets reached out to the Chinese Society for Metals and the Metallurgical Council of the China Council for the Promotion of International Trade, but neither provided comment.

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