ArcelorMittal Reducing Steel Discounts In Brazil - Report
28 September 2009 - 10:06PM
Dow Jones News
ArcelorMittal (MT) is expected to raise flat steel prices in
Brazil by 10% through reducing discounts, the Estado news agency
reported Monday.
The information came from Brazil's second-largest independent
steel distributor, Frefer.
Brazil's steel distributors account for around 30% of domestic
flat steel sales, which are expected to reach 3 million metric tons
this year.
ArcelorMittal's move comes after local rivals Companhia
Siderurgica Nacional, or CSN (SID), and Usiminas (USIM5.BR)
withdrew similar price discounts earlier this month.
According to Frefer's president, Christiano da Cunha Freire,
steel distribution has been the target for price increases because
it was the sector that cut its prices most during the worst moments
of the economic crisis.
Now, it is the first sector to reflect an improvement in the
market, he said.
Freire said ArcelorMittal wanted to end discounts to its
distribution clients by the end of September.
Last week Finance Minister Guido Mantega said Brazil may cut
steel import tariffs to zero if steel prices rise.
Mantega said a 15% tariff on steel imports, reintroduced in June
after three years at zero, might be scrapped if prices continued to
increase.
Earlier this month, Brazil's steel distribution association, or
INDA, said steel prices had risen between 10% and 14% in
September.
INDA President Carlos Loureiro said the rise was due to a
gradual recovery in domestic steel demand, along with a reduction
in discounts given by steel mills to distributors.
The discounts were as much as 35% at the height of the crisis,
he said.
Loureiro said he expected inventories in August were likely
sufficient for two months' supply, compared to a "normal" level of
2.6 months' supply.
Loureiro forecasted third-quarter steel sales in Brazil would
likely rise around 15%, compared with the second quarter.
- By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086;
john.kolodiejski@dowjones.com
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