The political agenda of new president Jair Bolsonaro could reduce existing import tariffs for the local steel sector, according to media reports citing Itau bank and a Credit Suisse report.
The Credit Suisse report said such a measure would likely impact domestic steelmakers, especially flat and longs producers. If Brazil reduces tariffs for importing steel, it would lead to an increased supply of imported products domestically, negatively affecting local steelmakers.
Separately, Itau said flats steelmaker Usiminas would suffer the most, while Gerdau would be less exposed to the measure, since it has business interests abroad. The impact of such a measure would also be limited for Companhia Siderurgica Nacional (CSN), which also has an iron ore business.
There have been rumors Brazil could reduce the existing import tariff for steel products from 12 percent to between 4 and 5 percent.