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Steel sales in the country may decrease by 20% in the year

The national steel sector already expects to end the year with a 20% drop in steel consumption throughout 2020, due to the consequences of the new coronavirus (Covid-19) in the country.

The initial projection of the Instituto Aço Brasil gave an increase of 5% over 2019, but it will possibly be impacted by the stoppage of the machinery and equipment, automotive and civil construction industries, which together account for 80% of what is produced by national mills.

The information was released by the president of the Institute, Marco Polo de Mello Lopes, in a digital press conference, who considered that the picture is not yet definitive and could be changed once again, if activities are resumed. According to him, the sector's demand plummeted in the last week and, among the negative effects of the pandemic in Brazil, there may be a "crisis of unimaginable proportion".

“We need to move towards economic recovery gradually, with the necessary safety, following the protocols and procedures that ensure people's health.

But this virtuous cycle needs to be started as soon as possible, otherwise, we could have an even bigger problem”, he argued.

Aço Brasil also estimates that demand from the steel industry will fall by half next month, compared to the current one, and that the result for the second quarter will be at least 40% lower than in the first three months of this year.

“We started the year with good prospects, but with a degree of utilization of the plants around 60%, when companies should be operating above 80% of capacity. Now, due to this drop in demand, this level could fall even further, if something is not done”, he explained.

Suspension of activities

In view of the situation, the official stated that companies in the sector are already considering changing or suspending their operations and, eventually, even smothering blast furnaces, including those located in Minas Gerais. Lopes recalled that stoppages in steel production processes require long-term planning and increase costs.

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“The resumption of a blast furnace, for example, can take around six months,” he recalled.
To reverse the situation, in addition to the gradual recovery of the national market, the steel companies also defend the maintenance of the operation of ports, highways and railways throughout Brazil. According to him, the “lockdown” measures adopted in several cities in the country could lead to the strangulation of the sector. “The raw material does not arrive and the final product does not flow either, all due to a logistical blackout”.

For him, as long as there is no resumption of consumption in the domestic market, companies will need, even more, to focus on exports, even in the face of a not very favorable scenario in the international market either – given the repressed demands and prices.

The executive stated that the Institute, which is part of the so-called Industry Coalition, formed by several national productive sectors, presented to the government a set of measures to support the recovery of the economy and stated that among the requests is an old one: the increase of the rate of Reintegra to 5%. Thus, according to Lopes, the sector will be able to improve the export price by 7%, gaining competitiveness.

“The international market is also difficult, full of unorthodox and repressed practices. But if they give us the least amount of conditions, we will use the possible channels to sell and increase the use of our installed capacity. Because the stoppage of a plant results in unemployment”, he warned.

ArcelorMittal

Through a note, ArcelorMittal Brasil confirmed that due to the serious impacts caused by the crisis related to the coronavirus, it will make adjustments in its production. In the long steel segment, the company will temporarily reduce production at some industrial units next month.

However, the company considered that the João Monlevade unit, the Andrade Mine and some forestry units located in the state will continue to produce at normal pace.

In the flat steel segment, the company decided to stop, within 45 days, the activities of blast furnace 3 at the Tubarão unit, in Espírito Santo. "Customer service will continue as normal, through stock and supply within needs and demand", he guaranteed in the document.

Source: Diário do Comércio - Mara Bianchetti

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