Brazilian long steel producers plan domestic price increases

Brazilian long steel producers Gerdau, ArcelorMittal Brasil and Votorantim Siderurgia have told local distributors that they plan to increase the prices of several products over the next few weeks, sources in the distribution chain told MB. 

Prices will increase by around 8% on average, helping the steelmakers recover some of the margin lost on price cuts that amounted to 25% in the second half of 2010, according to the sources. 

“In the case of Gerdau, for example, there was an overall increase of 10-12% in rebar prices in the middle of last year. But shortly after that, the company started giving discounts to compete with imported material,” a source at a major distributor based in Brazil’s southeastern region said. 

Domestic prices for CA 50 rebar 10mm diameter in southeast Brazil now stand 2,050-2,150 Reais ($1,227- 1,287) per tonne compared with around 2,750-2,850 Reais per tonne delivered in the middle of last year. 

The fall came on a series of price discounts given by the steelmakers starting in August, sources said. 

But the level of steel imports to Brazil has fallen because of higher international prices, which is now increasing the bargaining power of local steelmakers. 

With an average 8% increase, prices for the CA 50 rebar 10mm diameter will stand at around $2,250 Reais per tonne. 

Distributors have been selling the product for around 2,300-2,350 Reais per tonne and will pass on part of the increase to their final customers, they said. 

“[Gerdau] confirms the reduction in discounts applied in the Brazilian market for long steel [products],” it said, although it did not comment on the levels. 

“Percentages vary according to the region and the volumes asked by the customers,” the company said. 

ArcelorMittal Brasil does not comment on its pricing policy, it said. 

“This matter and contractual issues are dealt directly with its customers,” it added. 

Votorantim Siderurgia also said it would not comment. 

According to the Brazilian steel institute, IABr, long steel imports increased 165% in 2010 to 1.34 million tonnes.