US plans to impose quotas on Brazilian steel exports following Section 232 negotiations

The US government has flagged it plans to work with quotas, Aço Brasil executive president Marco Polo de Mello Lopes said on Tuesday April 24.

Brazil was temporarily excluded from a 25% Section 232 tariff on steel shipments to the US while negotiations between the countries are being held. The exemption is valid until May 1.

“Surprisingly, we have only one week left to reach an agreement,” Aço Brasil president Alexandre de Campos Lyra said.

If applied, the quotas would have to be broken down by company, according to the institute.

“There will be [a breakdown of the quotas] by company,” Lopes said. “Once a global quota is defined, we will sit down with associated companies in Aço Brasil and it will be difficult to define how the quota will be distributed.”

The institute continues to demand that semifinished steel products, such as billets and slabs, should be exempted from any tariffs or quotas.

Brazilian steel exports to the US are comprised mostly slabs, which are rerolled by US mills. The institute argues that blocking exports of the product would hurt US steel producers who depend on these shipments.

“The US is not self-sufficient in slab,” Lopes said.

Metal Bulletin’s weekly assessment of Brazilian slab export prices surpassed $600 per tonne fob after deliveries from the country to the US were temporarily exempted from tariffs.

The definition of negotiations over measures related to the Section 232 investigation puts at risk an Aço Brasil forecast for an 8.6% increase in crude steel production this year.

“Depending on the result of negotiations, there might be a huge impact in steel exports and also in crude steel production,” Lyra said.