Steel sale raises 18% in the domestic market
Folha de S. Paulo - 12/05/2007
Driven by the boom of the automotive and civil construction sectors, the steel sales grew 18% in the domestic market this year, estimates the IBS (Brazilian Institute of Metallurgy). The record figure of 20.7 million tons was commercialized. The production of the Brazilian mills also broke a record: 33.95 million tons of crude steel. Only the exportations did not do well. They dropped 15.6% this year due to the exchange rate and to the deviation of the product for the domestic market, which has experienced a year of strong heating in 2007, explained IBS' president Rinaldo de Campos Soares. The executive, who is also Usiminas' CEO, emphasized that 2007 "was a very good year for the metallurgy all over the world", Brazil included. According to him, the economic growth setting and the strong recovery of the automotive and civil construction sector have driven the Brazilian metallurgy. Together, the two branches correspond to 60% of the total consumption of steel in the country. For 2008, the IBS also draws a positive picture, however not as vigorous. It foresees a growth of 10.8% in the steel production, which should reach 37.6 million tons. As for the domestic consumption, the IBS estimates it will grow 10%. It won't repeat 2007's levels because the automobile sector should not keep the same dynamism of this year, although the forecast is also of increase of production and sales. The IBS believes that the exportations will react next year, in spite of the unfavorable exchange rate. The forecast is of a growth of 17.9%, in a more intense rhythm than the domestic sales. Campos denied that the heated consumption has been translated into expressive price increases, but he is concerned with the readjustment foreseen for the iron ore in 2008 - the raise may reach 50%. According to the executive, the sector also makes investments to expand the production capacity and avoid bottlenecks that could put pressure on prices. According to the IBS, until 2012 investments of US$ 17.2 billion in the expansion of the plants already installed in the country are already programmed, to elevate the production capacity in 15.1 million tons. With such investments, the installed capacity of the country leaped from 37 million tons of steel in the beginning of 2007 to 41 million tons in 2008. Until 2012, four other mills should be set up in the country, with estimated production of 6.8 million tons.