If accepted, for finished steel products, the quota would be limited to 70% of the three-year average, while for semi-finished products the limit will be 100% of the three-year average.
“Brazil still needs to decide whether or not to accept the offer. But there aren’t many options,” a source said.
The country’s steel exports to the US are mainly comprised of semi-finished products, mostly slab.
“It is an excellent offer to Brazilian steel sector,” Marcelo Araújo, founder of trading company AMS Crossborder Consultancy, told Metal Bulletin.
“If the deal is closed, export prices will remain at high levels. The deal also assures a good average volume to the country’s main exporting item, which is semi-finished steel,” he added.
If a deal is reached, based on exports volumes in the last three years, the limit would be around 3.50 million tonnes of semi-finished material per year, including carbon steel and alloyed billet and slab, sources told Metal Bulletin.
Brazilian steelmakers will breakdown the quotas for each company, and a meeting of members of the local steel institute, Aço Brasil, is expected to take place on Friday.
“Negotiations[are] likely to be very tense,” a source said.
“Brazilian mills will have to sit down and discuss an exporting strategy together,” Araújo said.
Brazilian exporters of semi-finished steel products to the USA are Gerdau, ArcelorMittal’s Tubarão, Ternium Brasil (formerly CSA) and Companhia Siderúrgica do Pecém (CSP).
CSP only started up its slab facility in June 2016.
Meanwhile, Ternium Brasil has a 2 million-tpy agreement to supply slab from Ternium Brasil’s facility to the ArcelorMittal and NSSMC joint venture AM/NS at Calvert, Alabama in the US, which formerly belonged to German steelmaker ThyssenKrupp.
“In the case of a breakdown of quotas by company based solely on each firm’s own exports, CSP would be heavily [disadvantaged],” a source said.
Brazil was temporarily excluded from a 25% Section 232 tariff on steel shipments to the US while negotiations take place. The exemption is valid until May 1.
Metal Bulletin’s weekly assessment for Brazilian slab exports was unchanged at $600-610 per tonne fob on Friday April 20.
Ana Paula Camargo in São Paulo contributed to this report.