Brazilian steel sector to get USD 16 billion investments by 2016
Mr Albano Vieira newly appointed CEO of national steel association IABr as saying that the Brazilian steel sector should receive USD 16 billion in investments by 2016, most of them going to downstream facilities.
Mr Vieira, who is also Votorantim Siderurgia's director, said that "Infrastructure and construction works are having a good period in the country, but it should end in 2016, when the Olympic Games are concluded. We expect an extra 8 million tonnes of steel to be consumed during the period, hence the investment's figure."
He said that IABr is studying the possibility to create a brand to encourage the consumption of steel produced locally, promoting mechanisms to eliminate asymmetries favouring imports and pushing for commercial defence to improve the sector's competitiveness.
He added that "This improvement should deal with tax relieves, integration of operations to reduce costs and local market's growth. The only possible form to increase steel consumption in the country is through infrastructure and construction works."
Mr Vieira said that "We have a sale's 4% to 5% tax burden that is not recoverable in the sales chain. When you compared this burden to China, where there is no tax on sales, you see how the sector is facing a hard time to improve its competitiveness."
According to Mr Vieira, also, steel plants in the country producing through electrical furnaces have an extra power consumption impact in production costs of about 20%. He said that "The institute is trying to make the country's steel sector competitive again. And to do so, we will have to deal with the energy issues affecting production."
Energy represents a large portion of steel production costs in Brazil, due to the ICMS interstate sales tax, as previously reported.
IABr is forecasting crude steel production to total 17.2 million tonnes in 1H12, down by 3.4% YoY. Rolled steel production is expected to reach 13.3 million tonnes in the same period, up by 3.1% YoY. Semi finished steel production should total 4 million tonnes in the first half, up by 4.3% YoY.
Source - Business News Americas