Brazilian flats steelmaker Usiminas would suffer the most impact if Brazil reduces import tariffs for steel products in the next four years, a media report from Valor said this week. The measure would also impact domestic producers Gerdau, and Companhia Siderurgica Nacional (CSN), but to a lesser extent.
Analysts expect a potential import tariff reduction for steel products to go from 12 percent currently to 4 percent. The measure would likely reduce steel prices in the domestic market by 5 percent, the media report said, without describing a specific steel product.
“A 5 percent reduction in domestic steel prices would result in an EBITDA decrease of BRL 170/mt ($42.08/mt) (for Usiminas), which would result in a BRL 601 million/year loss (for the flats producer),” analysts Daniel Sasson and Ricardo Monegaglia from Itau BBA estimated.
The same 5 percent decline in domestic steel prices would result in an EBITDA decrease of BRL 656 million/year ($162.4 million/year) for Gerdau and BRL 503 million/year ($124.5 million/year) for CSN.
Brazilian steelmakers would also see their steel sales volumes decline due to a reduction in the import tariff for steel products.