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Brazilian mills deny steel price stabilization agreement through December

Highlights

Mercosur stalls Brazil's steel tariff cuts

Steelmakers are operating near 75% of installed capacity

After Economy Minister Paulo Guedes affirmed that Brazilian steelmakers had pledged not to raise steel prices until the end of the year, the national steel association Aço Brasil denied that the sector had made agreements in this regard, even if informally.

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The minister's statements were made during a live event organized by Valor Econômico newspaper.

In an interview with the same newspaper, Aço Brasil's president Marco Pollo de Mello Lopes said July 15 that Guedes suggested a price lock due to fear of inflationary pressures and complaints from the civil construction sector.

Lopes' added that "due to compliance, competition and trade policies specific to each company, we could not sign this commitment."

According to Lopes, during the meetings with the minister it was mentioned that rising raw materials costs such as iron ore, scrap and met coal were "the reason for the adjustments in steel prices in Brazil and in the world" but have now showed some signs of stabilization.

He also told Guedes that steel supply in Brazil has balanced, with higher availability from local mills and a strong increase in imports.

Lopes further said that Brazilian steelmakers are operating near 75% of installed capacity and reducing exports.

What seemed like a misunderstanding comes after strong pressure from the civil construction sector to the federal government. The sector has been demanding a cut in the steel import tariff.

The minister said he would like to make this cut "tomorrow" but that some Mercosur ties would delay what he considered ideal, which would be a generalized drop in tariffs in the country, not just for steel.

An attempt to reduce the tariff by the minister, from 12% to 10.8% for steel, was blocked by Argentina, Guedes said.

Year to date the Brazilian domestic rebar price has risen 36.5% and has increased 154.3% in the past 12 months, according to S&P Global Platts data. The domestic hot-rolled coil price has risen 70.8% since January and increased 149.5% in the past 12 months, the data showed.