Brazil steel imports set to decline further in October as production slows on fiscal concerns

Key takeaways:

• Steel imports into Brazil are projected to decline further due to fiscal concerns and Chinese tax enforcement

• Brazilian steel imports and domestic output are both falling as weak demand and high interest rates weigh on the market

• The outlook for steel imports into Brazil could shift in 2026, with potential recovery linked to election-year stimulus

Steel imports into Brazil are expected to decline further from October, sources told Fastmarkets, citing fiscal concerns and new tax enforcement measures in China. The outlook follows recent data from Instituto Aço Brasil showing a drop in domestic steel production and a sharp, year-on-year decline in steel imports.
Steel import volumes into Brazil fell by 24% year on year in August 2025, while raw steel domestic production dropped by 4.6% in the same comparison, according to the association.

Outlook for steel imports into Brazil in late 2025

“A compulsory VAT [value-added tax] collection will begin in China on October 1,” a trade source importing steel into Brazil told Fastmarkets. “I met with a Chinese supplier this week, and he said that after October 1, things are going to get ugly.”

VAT is a consumption tax applied at each stage of production. “Some Chinese suppliers were not paying VAT, which allowed them to undercut prices unfairly,” the source said. “Now that this cost will be unavoidable, the theoretical outcome is an increase in China’s export prices.”

Reshaping Brazilian steel imports

Weak demand in the Brazilian market is another contributing factor to lower import and production volumes, the source said.

“Demand is weak because of the macroeconomic situation. Our basic interest rate is extremely high,” according to the source.

A distributor source who deals exclusively with domestic steel echoed the concern, warning of further declines in local output.

“Interest rates at current levels are hurting the entire market. There’s simply no internal demand,” the distributor said. “I’m seeing the mills push prices down just to keep material moving. That’s why I expect domestic prices to fall further next month.”

Brazil’s benchmark interest rate (Selic) remains at 15%, effectively stalling investment plans across industries, sources said.

The Central Bank of Brazil on Wednesday September 17 kept the Selic rate unchanged at 15% — the highest level in nearly two decades — as it continues to battle inflation that remains above the bank’s target ceiling.

“I talk to a lot of clients in the sector, and there’s consensus: They’re all revising their guidance downward,” an investment source said. “Major Brazilian companies are scaling back expectations for the coming years.”

Future prospects under weak demand

Despite the weak demand across the board, the sources said there is potential for a short-term recovery in 2026 — an election year in Brazil.

“Election years often bring government-backed stimulus programs targeting civil construction, especially low-income housing,” the investment source said.
“The civil construction sector is one of the most impacted by high interest rates.”

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