The negative prospects of the steel industry of Brazil

According to the report of the head of the metallurgical industry of Brazil, the excessive proposal began to adversely affect the prospects of the country's steel industry, exerting pressure on the price of steel products.

The report states that "Brazil’s black metallurgy suffers from increasing the cost of raw materials, which reduces the profit of the sector", in addition, the lack of internal demand also disappointed the representative of the steel industry, who are forced to suspend investment in modernization and expansion of industry. Independent analysts confirmed that a weak recovery of the sector is expected in 2013, and the demand for steel can grow from 2 to 4 percent a year.

The report also says that “the Brazilian market became enjoyed by a recent increase in steel prices at the beginning of this year, after a significant reduction in imports, as a consequence of higher tariffs, starting from the end of 2012, and a 15 percent reduction in their currency compared to last year. Local manufacturers began to increase the volume of sales by 7-8 percent, given the improvement of their competitive ones, given the improvement of their competitive positions, at least in the short term.

Given the current debt coefficient, it is expected that market conditions can lead to negative rating positions, as analysts by Raphael Vitoria and Diego Ocampo believe.