‘Difficult’ H2 may see results erosion amid weak trade defense: Brazil steel CEOs

Brazil's steel industry will see a "very difficult" second half of 2025, as trade-defense policies have had little or no effect on surging imports so far in 2025, and this may impact company performance, CEOs of some of the country's major steelmakers said.

"Imported steel is the biggest threat to our industry today," Silvia Nascimento, CEO of Aço Verde do Brasil, a low-carbon, green charcoal-based steelmaker, said on Aug. 27 at a conference. "Increases in imported steel have been real for some time, but have now reached dramatic proportions."

Speaking at the closing panel of the Brazilian Steel Institute's annual conference in Sao Paulo, Nascimento said that if the situation worsens, the market may face "irreversible capacity loss," calling for an urgent action plan to strengthen trade defense and incentivize domestic steel consumption, including via housing and infrastructure projects.

For decades, Brazil has had a stagnant annual steel consumption of 110-115/kg per capita, while some neighboring countries are increasing consumption to 250-400/kg per capita, she noted.

"An unacceptable 30% of domestic sales now come from imports," Marco Polo de Mello Lopes, executive president at the Brazilian Steel Institute, or Aco Brasil, said. "Nobody here is against imports, just not at the current level."

Armin Wuzella, CEO of Villares Metals, said the current tariff-quota system alone will not solve the problem.

Global tariffs and price compression are hurting margins and profitability, even while exports to the US have remained steady, or are even higher than 2024 levels, Jorge Oliveira, CEO of ArcelorMittal Brasil and ArcelorMittal Flat Steel Latin America, said.

Brazil continues exporting semis, mainly slabs, to the US at the rate of 6 million mt/year because the US mills need the product, but market dynamics have meant that FOB Brazil slabs prices to the US have fallen around 14% since the start of the year, Oliveira said.

Brazil, the largest exporter of semi-finished products to the US, will still have room for sales to that market, even with 50% import tariffs, he added.

"The US has the financial capacity to install semis capacity, but even if the decision to do this were taken today, it would take several years to build," Oliveira said.

Throughout the conference, industry leaders emphasized the need for investment to strengthen the sector, yet with interest rates at 15%, "no one is willing to invest," Nascimento said.

Brazil's current base rate is at its highest level since 2006.

Gerdau Group CEO Gustavo Werneck said companies can now proceed with new long-term capital allocations only if they have the certainty that domestic market conditions will improve.

"This is a central theme [to Brazil's steel industry] that needs to be discussed with the authorities," he said.

Werneck's statement came a month after Gerdau announced it would reduce investments in Brazil due to government inaction amid a surge in steel imports.

The Gerdau Group CEO said different economic sectors, including steel, machinery and equipment and agribusiness, are all lobbying the Ministry of Development, Industry, Commerce and Services, or MDIC, for diverse measures to improve their current situation, given the US tariffs and considering China's role as Brazil's largest trading partner. However, it may be more effective for sectors to work together, he said.

"Joint efforts are needed to propose solutions to MDIC that encompass all of us," he said.