LATIN AMERICA LONG STEEL WRAP: Brazilian construction industry yet to recover

The Brazilian long steel market continues to wait for the seasonal rebound in the local construction industry - unlike flat steel, which has seen recovering demand from the automotive and white goods sectors.

“[The recovery] of both construction and infrastructure sectors is overdue, but it will happen,” Benjamin Steinbruch, chief executive officer at Brazilian steel producer Companhia Siderúrgica Nacional (CSN), told analysts during a conference call on Tuesday March 27.

The gross domestic product (GDP) of the Brazilian construction industry fell by 5% on an annual basis in 2017. This contrasted with an increase of 1% in the country’s GDP after two consecutive years of contraction, according to the São Paulo state construction union, SindusCon-SP.

For this year, the union predicts a negative result for the construction sector.

“The slowdown of the past two years will still have an effect on [the] construction [industry] in 2018 due to the sector’s inertia,” SindusCon-SP president José Romeu Ferraz Neto said early in March.

“Today, around 50% of the movement in the construction industry is linked to small family reforms,” he added. “We have no new [construction] work starting, and in the real estate branch there is still stock available.”

But figures from Brazil’s steel institute, Aço Brasil, show that, although it is overdue, demand for long steel goods is improving slightly.

The country’s apparent consumption of long steel totaled 1.28 million tonnes in January-February 2018 - up by 12.50% from last year’s 1.14 million tonnes, according to the group.

Over the same period, long steel output increased by 5.50%, to 1.47 million tonnes from 1.39 million tonnes, while sales of long steel products to the Brazilian local market rose by 12.70%, to 1.11 million tonnes from 986,000 tonnes.

Meanwhile, the ability of Brazilian mills to raise their long steel prices has been questioned.

Much has been said about price increases in response to higher input costs and growing prices in the international market, but almost nothing has been done, according to local sources.

Metal Bulletin’s monthly price assessment for Brazilian rebar was stable month on month in early March, at 2,200-2,400 Reais ($663-723) per tonne delivered. This price will be updated on April 6.

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.