BRASILIA: The US dollar’s considerable strengthening against major currencies has not been enough to bring a positive effect on exports of Brazilian steel products, market players said.
“Exports have been unsustainable, only covering fixed costs,” a producer source said. “The US dollar is an advantage for us, but also for our competitors.”
A second producer source said falling steel prices globally have weighed on profitability, making exports possible only for those integrated producers with more competitive costs.
Brazilian companies have a priority to meet the needs of associated companies, then chase opportunities in the spot market, sources said. They said exporting rolled steel products from Brazil is considered a loss-making decision, with shipments of semifinished products the only option left.
“Brazil’s export prices for rebar, wire rod and hot-rolled coils have been higher than billets and slabs, so there is no market for that,” another supplier said, who said he would possibly offer rebar at $420/mt, but offer billets at $350/mt. “Nobody will buy this rebar if they can roll it at lower costs.”
The first producer source echoed the situation, citing HRC FOB prices up $100/mt over slab prices at $320/mt.
“There is a lot of pressure from Russian and Ukrainian suppliers, pushing semifinished products prices down while demand for rolled products is still weak,” he said.
Meanwhile, some players looking to keep up high production rates are said to be recovering presence in the Asian market for merchant semifinished products, sending large volumes on a monthly basis, but at lower prices.
Others are betting on long-term business relationships, betting on lower freights and higher bids from North America, offering differentiated grades and quality products.
