CEOs at Brazilian steelmakers demanded this week fair market conditions in the global steel markets, in statements during Brazil’s Steel Congress, promoted by local steel association IABr this week in Sao Paulo.
“Brazil’s steel industry doesn’t need subsidies,” said Gerdau CEO Gustavo Werneck. “We need competitive isonomy and fair conditions to compete in the global markets.”
Werneck added that while Brazil’s steel industry is competitive, bureaucracy hampers the local steel sector. “We have about 120 analysts in the fiscal area in Brazil, as opposed to 7 in our US operation,” he said, adding both operations are size-wise “comparable.”
Werneck said Gerdau invested $1.8 billion in a heavy plate rolling mill at its Ouro Branco mill in Minas Gerais state. “However, expected domestic demand didn’t come. So we had to direct 40 percent of our production to the export market,” he said.
“Beside each heavy plate we export, there’s a 7 percent residual tax. No foreign buyer is willing to pay that tax. So we use our margins to offset that residual tax,” Werneck said.
Werneck said the “only way” to increase the use of the steel industry’s capacity, currently at 68 percent, is through exports.
Jefferson de Paula, CEO ArcelorMittal South America Longs, agreed. “I support the idea of opening up the markets,” he said. “However, if we open up our market, everyone needs to do the same. We need equal market conditions.”
De Paula said that in order for Brazil’s steel industry to resume growth, it needs economic stability, long-term government planning, as well as a long-term regulatory framework.