Supplies in excess of quotas will be subject to a 25% duty

The Brazilian government has decided to introduce a system of import quotas for 11 types of steel products. Supplies exceeding the quota will be subject to a 25% duty. The country is thus strengthening the protection of local steelmakers amid an influx of cheap steel from abroad, Reuters reports.

According to the decision of the state foreign trade authority Gecex/Camex, the 25% increase in import tariffs will be effective for 12 months for such products as rolled steel and pipes. Currently, import duties on these products range from 9% to 12.6%.

The higher tariff will be levied on products whose imports increased by more than 30% compared to the 2020-2022 average.

Brazilian steelmakers have long called on the government to impose higher import duties, noting that cheaper steel from Russia and China has flooded the market, forcing local companies to idle capacity.

According to the industry group Aco Brasil, steel imports to Brazil increased by 25% y/y in the first quarter of 2024.

The government is also considering introducing quotas for four other types of steel products.

According to Geraldo Alkmin, Vice President of Gecex/Camex, the agency’s analysis shows that imports will mostly remain within the quota. He called the government’s decision extremely cautious, as the country’s steelmakers had asked for an increase in import duties on a total of 35 types of steel products.

«But this is an important step, because the steel industry is really working with a huge level of downtime,» Alkmin said.

Gecex/Camex said in a statement that market conditions will be monitored over the next 12 months. The new rules, which still need to be approved by the South American trade bloc Mercosur, could come into effect within a month.

As GMK Center reported earlier, Brazilian steelmakers are going to invest 63 billion reais (almost $12.5 billion) in the industry over the next four years. Over the past 14 years, investments in the sector have totaled more than 170 billion reais ($33.7 billion). The forecast demonstrates the industry’s confidence in the country despite the current unfavorable economic scenario, including a high base interest rate. In addition, the steel sector faces strong competition from Russia and China.