LATIN AMERICA FLAT STEEL WRAP: Brazilian demand to recover in November, prices to stabilise

Flat steel demand in Brazil is showing signs of recovery, but stable prices in China should prevent local mills from applying further price increases in November.

Brazilian flat steel sales increased by 5.60% year-on-year in September, to 265,400 tonnes, according to national flat steel association Inda. For October, sales are predicted to rise by 8.78% on an annual basis.

As a consequence, the group is now expecting to end the year with an overall reduction of only 1.50-2.00% in flat steel sales compared with 2016’s volumes. Inda previously forecast a decline of 5% in sales in 2017.

For November, despite the positive outlook in terms of consumption, Brazilian steel producers are not expected to raise local prices because there is no room for additional adjustments.

“The rises announced [by companies] in the July-September period reflected higher international prices, especially in China, but now prices have stabilised at lower levels than the ones seen in mid-2017,” a São Paulo-based source said.

“Mills should not take the risk and apply new price increases, as they could lose market share to imports again,” a second Brazilian source added.

From January to September, Brazilian flat steel imports more than doubled year-on-year, to 952,103 tonnes from 378,813 tonnes, Inda figures show.

During this period, imports accounted for 13.50% of Brazil’s total apparent flat steel consumption, according to Inda.

“The market share of imports in [the Brazilian flat steel] market will continue to be in two-digit numbers, which is healthy for any economy in any segment since it helps the chain to compete internationally,” Marcelo Araujo, a trader at AMS Crossborder Consulting, said.

But Araujo noted that high freight rates and the reduced maritime fleet turnover prevents imported goods from being more competitive.

Metal Bulletin’s weekly price assessment for cold rolled coil (CRC) imports into South America, including Brazil, came to $630-635 per tonne cfr on Friday October 20, down from $640-650 per tonne cfr on September 29.

Over the same period, import prices of hot rolled coil (HRC) into the region fell to $580-585 per tonne cfr from $590-600 per tonne cfr.

These declines were mostly due to reduced offers being placed in the market by Chinese mills.

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