Downtime at enterprises will last until December 2023

Earlier this week, ArcelorMittal Brasil confirmed that it was temporarily suspending production at three steel mills in southeastern Brazil due to low domestic demand and unprecedented levels of imports. This is reported by S&P Global.

The temporary suspension applies to the plants in Juiz de Fora (a major producer of long products), Piracicaba and Resende, where a technical break will be announced until December. About 400 employees at the Resende plant will go on collective leave.

«This measure is part of the company’s efforts to bring its production in line with the scenario of low demand for steel in the domestic market and record growth in imports,» ArcelorMittal Brasil said.

ArcelorMittal Brasil expects steel production in the country to fall by 1.3 million tons this year compared to last year (12.7 million tons were produced in 2022).

According to market data, the sharp rise in direct and indirect steel imports, including from China, is increasingly affecting domestic sales and production of Brazilian steelmakers.

«Given unfair competition from steel imports supplied by some countries at subsidized prices, ArcelorMittal supports a temporary increase in steel import taxes to 25% until the situation on the domestic market normalizes,» the company said.

Various steel producers are currently negotiating with the government over a potential increase in duties. Current taxes on steel imports in Brazil range from 9.6% to 12.8%, depending on the type of product. According to the Brazilian Steel Institute IABr, foreign supplies usually account for 12% of the country’s domestic market, but in September 2023, the import penetration rate reached 23%. According to the forecast, in 2023, the inflow of Chinese steel to the country will increase by 50% y/y – to 5 million tons, which is 25% of the country’s annual steel consumption.

As GMK Center reported earlier, in September Brazilian steelmakers urged the federal government to raise import duties on steel amid an increase in its supplies from abroad, especially from China. Representatives of the steel industry have warned that if the pace of imports remains at the current level, local companies may stop production and reduce the number of jobs.