ReportsnReports.com: Brazil Metals Report Q3 2011
Business Monitor International 's "Brazil Metals Report Q3 2011" is now available at ReportsnReports.
- Dallas, TX (1888PressRelease) August 10, 2011 - High costs of production, rising inventories, a strong real and a cooling domestic market are all militating against sustained growth in Brazilian steel and aluminum output in 2011, according to this latest Brazil Metals Report from BMI.
Crude steel output rose 7.8% year-on-year (y-o-y) in the first four months of the year to 11.5mn tonnes, while rolled steel products production grew 0.9% y-o-y to 8.5mn tonnes, according to the Instituto Ašo Brasil (Brazilian Steel Institute, IABr). Domestic sales in the four-month period were up 6.3% y-o-y to 7.2mn tonnes. Exports of steel products in the January to April 2011 period rose by 30.7% y-o-y in volume terms to 3.7mn tonnes and by 68.1% y-o-y in value terms to US$2.7bn. The IABr said that imports of steel products into Brazil fell by 38% y-o-y to 1.13mn tonnes in volume and 16.5% y-o-y to US$1.31bn in value.
The market is beginning to feel the pressure from the central bank's recent increases in the base interest rate and BMI anticipates lower rates of output growth as a result, despite an increase in capacity over the year. We forecast 2.9% growth in crude steel output to 34.51mn tonnes in 2011 and 2.5% growth in hot rolled output to 23.89mn tonnes. Measures to clamp down on excess liquidity in the market in order to curb inflation have led to falling industrial production activity. Higher Brazilian steel prices have also depressed demand, resulting in mounting inventories. BMI expects 4% growth in apparent finished steel consumption to 24.91mn tonnes in 2011, although growth should pick up from 2012. Unless Brazilian steel prices rise to more than a 10% premium over global prices, it is unlikely that domestic production will be substituted for imports on the Brazilian market.
The reliance on the domestic market and lack of diversification into external markets is limiting opportunities for expansion. The Brazilian Steel Institute has said that Brazil steel plants currently have the capacity to produce 47.4mn tonnes per annum (tpa) of crude steel and that actual output in 2011 should reach 39.4mn tonnes. On current plans, by end-2015 Brazilian crude steel capacity could increase by up to 30mn tpa. BMI doubts the country would be able to justify an increase in steelmaking as large as this and does not believe that some of the larger projects will go ahead. A moderation in domestic demand growth, a high tax burden coupled with high interest rates and a strong real will militate against sustained high rates of output growth.
Buy Now: http://www.reportsnreports.com/reports/111806-brazil-metals-report-q3-2011.html
The aluminum Brazil metals industry is faced with similar challenges to steel. In the first five months of 2011, Brazilian primary aluminium output declined 6.6% y-o-y to 592,500 tonnes. BMI believes that fullyear output in 2011 will decline by around 3% y-o-y to 1.45mn tonnes. Novelis's 49.4% decline in output is the result of the closure of its Aratu smelter and a slight decline in its Ouro Preto smelter. The Companhia Brasileira de Aluminio smelter also reported a 16.2% decline in output, outweighing the increase in output reported by smelters owned by Albras, Alcoa and BHP Billiton. ABAL has forecast aluminium product consumption growth of 13% in 2011 with domestic production of aluminium wire and cable set to benefit most from an expected 58% rise in production. BMI expects Brazilian aluminium demand to grow by an average of around 7-9% over the next five years, driven by consumer goods and the automotive industry. However, high energy prices are hampering future growth prospects in output and much of the increase in consumption will benefit imports.
ReportsnReports is an online library of over 100,000+ market research reports and in-depth market research studies & analysis of over 5000 micro markets. We provide 24/7 online and offline support to our customers. Get in touch with us for your needs of market research reports.
Follow us on Twitter: http://twitter.com/marketsreports
Our Facebook Page: http://www.facebook.com/pages/ReportsnReports/191441427571689