Steelmakers Will Likely Witness a Recovery in Sales and a Reduction in Excess Capacity

Reuters reported that steelmakers in Brazil will likely witness a recovery in sales and a reduction in excess capacity next year as recent government measures to revive growth are bearing fruit.

Instituto Aço Brasil said that domestic sales of rolled and other steel products may rise to 23.4 million tonnes next year, up 7.8% from an estimated 21.7 million tonnes in 2012. Sales will probably rise 1.3% this year.

IABr said that apparent consumption, or the sum of domestic sales and imports of steel, is expected at 26.4 million tonnes next year even as imports are seen down by nearly 1 million tonnes.

The tone for next year is "of an improvement," following a couple of weak years for an industry that employs about 140,000 in the country.

Brazil's steel industry is facing one of its worst crises in years. Mills in Brazil are grappling with global steel overcapacity and weak prices, rising costs for some raw materials such as coal, and a domestic output glut.

The statement said that "It is believed that the measures that are being adopted by the government will propel growth in the coming year and will be reflected in better results for the sector.”

IABr said that sales of rolled steel in the country are seen returning next year to levels not seen since 2008. Idle capacity in raw steel production should be down by seven percentage points next year, the group estimates.