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Brazilian flat steel buyers look to manage inventories, financial liquidity

Friday, 13 August 2021

S&P Global Platts assessed the weekly Brazilian domestic hot-rolled-coil unchanged at Real 6,900/mt ex-works, excluding taxes. It was based on a range of Real 6,800-7,000/mt, with steel inventories and liquidity management an ongoing concern, sources said.

End-user demand has been moderate and it was now becoming clear that steel inventories have reached elevated levels at some service centers and stockholders, prompting them to sell at discount to cover short-term financing requirements.

In contrast, others holding low inventories were managing to stockpile, taking advantage of the discounts in place by others distributors.

According to a producer, prices remained at the same level.

"We are going to extend the HRC base price until October," he said.

Market sources said the base price to be practiced for distribution in August would be around Real 8,000/mt including taxes, approximately 2.5% lower than that practiced in July, ex-works.

A source close to a mill said they were not moving prices, but the market base has already fallen sharply from last week's prices, nearly 10%.

He reported current selling prices for HRC at Real 6,570/mt ex-works.

Two distributors reported buying HRC at Real 6,565/mt and Real 6,925/mt, ex-works, respectively, while a large industry was able to buy at a lower level of Real 5,865/mt.

For one of the sources, the drop in domestic sales volume was due to the entry of imports.

"I still think the volume of imports is small,” he said, explaining that customers have been relying on the narrative of a market well-supplied by imports and holding back their purchases with local mills to press for more profitable prices domestically.

S&P Global Platts assessed the weekly Brazilian domestic cold-rolled-coil unchanged at Real 7,500/mt ex-works, excluding taxes. It was based on a range of Real 7,400-7,600/mt.

Distributors reported buying CRC at Real 7,550/mt and at Real 7,800/mt, while a redistributor cited paying above Real 10,000/mt.

The redistributor echoed the scenario of price stability, but said the demand was weaker at the pinnacle, from 10% to 15%, compared to the previous month.

He added that high steel prices made some final products infeasible and impacted demand mainly from automakers.

“Prices held back the market,” he said.

The Platts weekly hot-dipped-galvanized coil assessment was also static at Real 8,100/mt ex-works, based on a range of Real 7,900-8,300/mt.

Nevertheless, one mill source told a consumer they were sold out by year-end, thus not making any additional sales internally or abroad of HDG at this point.

A distributor, however, said that it would be possible to buy the coil at around Real 8,500/mt.

-- Mayara Baggio

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