- Steel Production Surged by 9.3% in Brazil Last Year

Steel Production Surged by 9.3% in Brazil Last Year

Tuesday, 05 February 2008

The Brazilian steel industrytouched a record level by producing 33.784 Million Metric Tons steel last yearand IBS is expecting same trend to continue in 2008 as well.

According to the Brazilian SteelInstitute (IBS) on January 25, 2008, the production of steel touched a recordhigh in 2007, as reported by fxstreet.com.

The crude steel production in2007 was 33.784 Million Metric Tons, which was up by 9.3% from 30.901 MillionMetric Tons of 2006. Nevertheless, the production was below from year end-projections of the trade group that forecasted 9.9% increase, equivalent of33.958 Million Metric Tons in December 2007. Despite that, the hike isremarkable, according to IBS.

Rise in production and economicgrowth drove the demand of steel in Brazil as well as in the internationalmarket. Boom in the construction industry of Brazil increased the demand forlong steel products and their sale increased by 18.5%, equal to 7.714 MillionMetric Tons.

The expansion plans at Tubaraounit of ArcelorMittal and at Acominas of Gerdau would further push theproduction of crude steel. With the accomplishment of both the projects, theproduction of steel would touch a new high.

The automobile and civilconstruction industries of Brazil saw strong growth in 2007, as a result, thedemand for steel products increased throughout the year. Both industries wereresponsible for 60% sale of Brazilian steel last year.

All these reasons will translateinto an exceptional 2008 in terms of production of steel, according to IBS.Moreover, IBS expected that the production of steel would touch 37.637 MillionMetric Tons in 2008, which would be 10.8% higher than 2007 projection.

High competitive prices areattributed to strong expansion plans in the Brazilian steel production. Thebenefits of competitive prices extended to the whole process of steelproduction from sintering to cold rolling. Another reason for high productionof steel is abundance of high quality iron ore and integrated logistics thatincludes lesser distance between sources, refining plants, ports and theconsumption centers.

According to a Senior Research Analystat RNCOS , “The Brazilian steel industry ison rise and is growing at a rapid pace. All the associated sectors, includingconstruction and automobile, are contributing in the production of the crudesteel. To meet the escalating demand for steel in Brazil, the steel industryhas to explore new scope and areas for further growth. The government has togive complete support to the industry by formulating policies that encourageforeign direct investment in the industry.”

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