{"id":93491,"date":"2025-04-01T16:00:51","date_gmt":"2025-04-01T19:00:51","guid":{"rendered":"https:\/\/murray.adv.br\/?p=93491"},"modified":"2025-04-01T16:00:55","modified_gmt":"2025-04-01T19:00:55","slug":"construction-sustains-steel-demand-as-manufacturing-industry-declines","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/construction-sustains-steel-demand-as-manufacturing-industry-declines\/","title":{"rendered":"Construction sustains steel demand as manufacturing industry declines"},"content":{"rendered":"\n
Consumers complain about high prices; producers se Chinese competition as unfair<\/strong><\/em><\/h6>\n\n\n\n

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04\/01\/2025<\/p>\n\n\n\n

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Amid weakened demand across various industrial sectors, the construction sector continues to sustain steel consumption in Brazil<\/a>. Driven by housing and infrastructure projects, construction companies keep purchasing, while other segments are either scaling back or increasing imports to cut costs.<\/p>\n\n\n\n

The Brazilian market is grappling with a surge of Chinese steel imports, putting pressure on domestic steelmakers\u2019 results. Over the course of 2024, imports have reached nearly 25% of total steel consumption in some moments. However, the penetration of imports in the construction industry remained lower, as long steel products\u2014such as rebar, bars, and profiles used in metal structures\u2014are less vulnerable to Asian competition.<\/p>\n\n\n\n

\u201cIf not for the domestic demand from the construction industry, 2024 would have been very challenging, possibly even resulting in losses,\u201d said Silvia Nascimento, president of A\u00e7o Verde Brasil, noting that 2025 will resemble the past year, with construction continuing to uphold demand.<\/p>\n\n\n\n

The construction sector has increased its steel purchases due to the growth in real estate production since the pandemic, remaining high despite rising interest rates, fueled by the My Home My Life housing program (MCMV). According to the Brazilian Construction Industry Chamber (CBIC), 60% of current steel consumption stems from real estate and 40% from infrastructure, though infrastructure projects use proportionally more steel.<\/p>\n\n\n\n

In 2024, the number of new housing units launched in the country rose by 18.6%, according to CBIC, with 383,500 new units put up for sale, half of which belong to the MCMV, launches under this program increased by 44% in a year.<\/p>\n\n\n\n

Companies like Gerdau benefit from this scenario<\/a>, as they focus their production on long steel products. In a February interview with Valor, CFO and Investor Relations Director Rafael Japur indicated that the outlook is positive for the first half of 2025, although uncertain for the second half.<\/p>\n\n\n\n

\u201cThere is uncertainty in some key sectors, such as construction, regarding the effects of a stronger interest rate hike and real estate financing,\u201d he explained.<\/p>\n\n\n\n

Rebar imports totaled 156,000 tonnes from January to September, compared to a domestic sale of 2.75 million tonnes. Although the participation is still low, it has grown since the pandemic, noted Dionyzio Klavdianos, president of the Materials, Technology, Quality, and Productivity Committee at CBIC. In 2020, the ratio was 15,200 tonnes imported to 3.28 million tonnes sold domestically.<\/p>\n\n\n\n

During that period, steel shortages encouraged imports, which allowed the construction sector to \u201cbecome more familiar\u201d with foreign producers, Mr. Klavdianos said. Turkey is the largest rebar exporter to Brazil, but it can also come from Egypt and Latin American countries. Chinese producers do not have the required certification to sell to the Brazilian market, although they could obtain it if there is interest, the director argued.<\/p>\n\n\n\n

\u201cGiven the increasing cost of selling to the U.S., the Chinese industry could become interested in the Brazilian market, resolve this technical barrier issue, and start to supply rebar to construction,\u201d he pointed out.<\/p>\n\n\n\n

Domestic producers remain the preferred choice in the segment as they offer high-quality materials and additional services, such as on-site support, Mr. Klavdianos explained. There is also a challenge for small construction companies to bear the cost of imported steel, which must be paid upfront, and a fear of confronting the steel industry, which could impose higher prices on Brazilian construction companies if the volume of imports rises too much. \u201cYou would still need to buy from them,\u201d the CBIC director said.<\/p>\n\n\n\n

Currently, steel is not the most burdensome material in construction projects. According to the sector\u2019s inflation indicator, the National Construction Cost Index (INCC), rebar saw a 5.84% increase over the past 12 months, compared to a 7.32% overall indicator by March. Ana Maria Castelo, project coordinator at the Funda\u00e7\u00e3o Getulio Vargas\u2019s Brazilian Institute of Economics (Ibre-FGV), noted that although other materials saw higher increases, such as PVC pipes (17.6%) and concrete blocks (8.12%), steel is extensively used in construction, so any increase is felt in the sector.<\/p>\n\n\n\n

In addition to rebar, used in building foundations and infrastructure structures, steel mesh\u2014which is placed inside the walls of low-income housing\u2014is gaining ground, particularly in the sector that has grown the most in the country. As Mr. Klavdianos explains, this material is key for the reinforced concrete wall construction system, the most used in MCMV, because it reduces project completion time\u2014the faster they deliver it, the quicker the companies receive funds from Caixa Econ\u00f4mica Federal.<\/p>\n\n\n\n

The steel industry has moved to request the government to increase the import tax on wire rod, a type of steel that forms the basis for mesh\u2014in other specifications, it is also used to make nails and wires. The matter is currently under study. According to the CBIC, 172,000 tonnes of wire rod were imported by September from the same countries producing rebar, while the domestic industry sold 1.2 million tonnes during the same period.<\/p>\n\n\n\n

According to the director, despite government support for the national steel industry, increasing import costs would lead to a general rise in material prices, directly impacting construction costs and the attractiveness of the MCMV, one of its main programs.<\/p>\n\n\n\n

Meanwhile, other crucial sectors for steel consumption, such as machinery and equipment, are showing reduced growth. The segment claims that rising input costs, especially domestic steel, compromise its competitiveness.<\/p>\n\n\n\n

In an interview with Valor, Jos\u00e9 Velloso, executive president of ABIMAQ, said the machinery and equipment sector has been reducing its revenue\u2014and therefore its steel demand\u2014over the past decade, reflecting the segment\u2019s contraction in the country. According to him, most companies are not large enough to buy directly from steelmakers due to the volume required. Over 90% of manufacturers source from distributors, paying higher prices.<\/p>\n\n\n\n

\u201cMost companies in the sector do not import steel; they are medium-sized, with a transaction volume around R$100 million. They don\u2019t meet the minimum volume,\u201d he explained. According to the executive, the price of the input in Brazil compared to international prices is the factor most affecting competitiveness. \u201cThe price of rolled steel increased by 12% to 17% from May 2024 to January 2025,\u201d he pointed out.<\/p>\n\n\n\n

Other representative entities, such as ANFAVEA (National Association of Vehicle Manufacturers), also advocate for local producers to lower their prices, arguing that the cost of domestic steel inflates final products and undermines competitiveness against international players. When contacted, ANFAVEA declined to comment. In this scenario, the price gap between Brazilian and international steel has gained prominence.<\/p>\n\n\n\n

On the other hand, Instituto A\u00e7o Brasil\u2014representing the country\u2019s major steelmakers\u2014has stated that production costs are higher due to factors like tax burdens, electricity, and logistics. Moreover, Chinese steel is subsidized by the Beijing government. The entity declined to comment on the matter.<\/p>\n\n\n\n

Analyzing foreign trade data on steel imports, Rodrigo Scolaro, an economist at GEP Costdrivers, highlighted the increase in Chinese steel imports, particularly in flat steel used for industrial processes like machinery and automobile manufacturing.<\/p>\n\n\n\n

\u201cWhen we talk about industries importing [steel], that involves the parts industry. Last year, we had import quotas in Brazil that did not meet the desired result of curtailing imports,\u201d he said.<\/p>\n\n\n\n

According to Mr. Scolaro, while steelmakers are pressuring the government for trade defense measures, auto parts and automakers are working in the opposite direction, advocating against additional taxes on imported steel.<\/p>\n\n\n\n

When contacted, SINDIPE\u00c7AS, representing the auto parts industry, declined to comment.<\/p>\n\n\n\n

The government is closely monitoring the situation. Discussions are underway in the Ministry of Development, Industry, Trade, and Services (MDIC) about potential safeguards or anti-dumping tariffs to curb the rise of imported steel, but no decision has been made yet.<\/p>\n\n\n\n

*By\u00a0Robson Rodrigues\u00a0and\u00a0Ana Luiza Tieghi\u00a0\u2014 S\u00e3o Paulo<\/p>\n\n\n\n

Source: Valor International<\/p>\n\n\n\n

\nhttps:\/\/valorinternational.globo.com\/\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

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