Brazilian Steel Industry To Invest US$19.5 Billion

Brazilian steelmakers will invest 100.2 billion Brazilian reals ($19.5 billion) over the next five years in production expansion, process upgrades and decarbonization projects. Brazilian President Lula announced the news this week, but he did not provide any details about which companies planned to do so.

Lula said these actions will strengthen and improve the competitiveness of the sector.

The industry has previously announced a number of major projects, which have already begun implementation. They viewed Lula’s announcement as a political ploy to quell the industry’s demands for protectionist measures to boost competitiveness and protect investments made in recent years.

One of the government’s actions to encourage the development of the steel industry is the recent decision to implement quotas on 11 steel tariff parts and increase the import tax to 25%. Import taxes will be levied on parts exceeding the quota.

The tariffs will apply to coiled plates under HS Chapters 7208, 7209 and 7210, with quotas set at 185,983 tonnes, 301,679 tonnes and 937,801 tonnes respectively. The wire rod quota under HS Chapter 7213 is 158,929 tons, and the pipe quota under HS Chapter 7305 and 7306 is 2,494 tons and 1,153 tons respectively.

The measures are expected to come into effect after being published in the Official Gazette in early June. The Brazilian Chamber of Foreign Trade (Gecex) is evaluating expanding tariffs on four other steel products including pipes.

Gustavo Werneck, board member of the local steelmakers association Instituto Aço Brasil (IAB) and CEO of Gerdau, commented: “These measures are very important for the steel industry, but do not completely solve our problems, as they are valid for a maximum of one year. “