With a historic measure to protect national steel production, Marco Polo, president of the Brazil Steel Institute (IABR), which represents Brazilian steelmakers, analyzed the decision of the federal government to implement quotas on steel product imports and impose a 25% surtax on imports exceeding that quota.
The decision was made on Tuesday (04/23) by the Executive Committee of the Foreign Trade Chamber (Camex), a collegiate body of the federal government that brings together ten ministries, after national steel companies filed a request to increase the Import Tax rate on various steel-related products to up to 25%.
“It took nine months of negotiations to resolve this issue of predatory steel imports that were harming the sector in Brazil. The government’s decision was historic.
It has an important psychological effect on the sector and sends a message to the international market: Brazil can implement systematic measures against predatory (steel) imports,” said Marco Polo in an exclusive interview with O Tempo.
According to him, the sector committed to resuming planned investments and maintaining jobs in the steel mills, which were threatened by the increase in steel imports, mainly from China. Marco Polo stated that on average, the sector invests around R$12 billion per year in Brazil.
These are average values for maintaining the manufacturing units, but they can increase according to the new projects of the steel companies. Major companies such as Usiminas, Gerdau, Arcelor, and Aperam have billion-dollar investment plans in progress, with a large part of them in Minas Gerais.
During the nine months of negotiations between the sector and the federal government to impose this surtax on imported products, these investments were put at risk if protective measures for the domestic market were not implemented.
When contacted by the press, the companies stated that they would not comment on the issue at this time, delegating all analyses and repercussions on the subject to the Brazil Steel Institute.
Marco Polo mentioned that it is not yet possible to quantify the benefits that the measure will bring from now on, but he informed that it significantly alleviates the negative forecasts that the IABR had for the sector in 2024 if imported steel continued to “invade the Brazilian market.”
In a report released in November of last year, the IABR predicted a 3% drop in steel production for 2024, to 30.4 million tons, and a 6% drop in domestic sales to 18 million tons. Imports were expected to surge by 20%, surpassing the increase seen in 2023, to 6 million tons, or 79% more than just two years earlier, in 2022.
According to the institute’s calculations at the time, this volume of foreign steel would represent a loss of R$3.4 billion in revenue and thousands of jobs. The potential loss of sector revenue could reach R$36.7 billion if protective measures for the domestic market were not taken.
Furthermore, Marco Polo stated that China was selling a ton of steel for $50 to $56 less than the production cost. The government of the Asian country subsidizes its steel to gain market share. “Unfair competition and predatory importation,” he said.
The United States, Europe, Mexico, and Chile (which also announced its protective measure on Tuesday) have already imposed a 25% surtax on Chinese steel, a rate that Brazil will now apply to the excess imported steel above the quota established by the government with the companies.
The products targeted by the measure currently have tariffs ranging from 9% to 12.6%. In 2023, imports captured 26% of the national market. The volume bought from other countries, mainly from China, responsible for 83% of the imports, represented 16% of national steel product production last year.
The president of IABR mentioned that the sector will now have more peace of mind. He also said that the production line shutdowns in Brazil that occurred last year to balance production with demand may no longer happen.
He praised the role of the Vice President and Minister of Development, Industry, Trade (MDIC), Geraldo Alckmin, and the MDIC’s Executive Secretary, Márcio Elias, in resolving the issue plaguing the Brazilian steel sector.
In a press interview on Tuesday, Alckmin stated that the decision was made after a thorough analysis by the government and the observation of over 1000% growth in imports in some cases.
“It is an important industry, a basic industry necessary for the country,” said the Vice President. According to the government, technical studies showed that the measure will not impact consumer prices or products derived from the production chain.
Over the next 12 months, the market’s behavior will be monitored, and the official expectation is that the decision will help reduce the idle capacity of the national steel industry.
The 11 steel products that will be subject to import quotas are as follows:1. Flat-rolled products of iron or non-alloy steel, of a width equal to or greater than 600 millimeters (mm), coated with aluminum-zinc alloys;2.
Flat-rolled products of iron or non-alloy steel, of a width equal to or greater than 600 mm, plated or coated, galvanized by another process, with a thickness of less than 4.75 mm;3.
Flat-rolled products of iron or non-alloy steel, of a width equal to or greater than 600 mm, not plated or coated, or coated, in rolls simply cold-rolled, with a thickness greater than 1 mm, but less than 3 mm;4.
Flat-rolled products of iron or non-alloy steel, of a width equal to or greater than 600 mm, not plated or coated, in rolls simply cold-rolled, with a thickness equal to or greater than 0.5 mm, but not more than 1 mm;5.
Flat-rolled products of iron or non-alloy steel, of a width equal to or greater than 600 mm, hot-rolled, not plated or coated, in rolls, simply hot-rolled, with a thickness equal to or greater than 4.75 mm, but not more than 10 mm;6.
Other flat-rolled products of iron or non-alloy steel, of a width equal to or greater than 600 mm, not plated or coated, in rolls, simply hot-rolled, with a thickness equal to or greater than 3 mm, but less than 4.75 mm;7.
Flat-rolled products of iron or non-alloy steel, of a width equal to or greater than 600 mm, not plated or coated, in rolls, simply hot-rolled, with a thickness of less than 3 mm, with a minimum yield strength of 275 MPa;8.
Other flat-rolled products of iron or non-alloy steel, of a width equal to or greater than 600 mm, not plated or coated, in rolls, simply hot-rolled, with a thickness of less than 3 mm;9. Other non-alloy iron or steel wire rods, of circular section, with a diameter less than 14 mm;10.
Pipes of the types used in oil pipelines or gas pipelines, longitudinally welded by submerged arc welding, of circular section, with an outer diameter greater than 406.4 mm, made of iron or steel;11.
Other pipes of the types used in oil pipelines or gas pipelines, longitudinally welded, of circular section, with an outer diameter greater than 406.4 mm, made of iron or steel.List of the four products that may have quotas:
“
