Brazilian steelmakers, including industry giants CSN and Usiminas, are set for a rebound in the second half of 2024, thanks to new protective tariffs on imported steel and an improving economic outlook. The Brazilian government implemented a quota and tariff system in May, imposing a 25% tariff on steel imports that exceed established quotas. In response, CSN and Usiminas have announced upcoming price hikes aimed at bolstering profitability in a sector that has experienced mixed results—higher sales and production volumes accompanied by lower revenues and losses.
The appreciation of the USD against the Brazilian real, which has surged over 12% this year, is expected to further benefit these local manufacturers. The stronger dollar increases the cost of imports, making domestic products more competitive. Analysts are optimistic that these developments—new tariffs and the currency's appreciation—will improve the competitive position of Brazilian firms like CSN and Usiminas, potentially leading to better financial outcomes in the near future.
Despite these favorable factors, challenges remain. The sector still faces stiff competition from Chinese steelmakers, who have been increasing their focus on exports due to a slowdown in domestic demand. Additionally, there are ongoing concerns about the effectiveness of Brazil's complex tariff and quota system. Nevertheless, with a stronger domestic demand and strategic price adjustments from firms like CSN and Usiminas, the outlook for Brazil’s steel industry remains cautiously optimistic as it moves toward the end of 2024.
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