Steel prices in Brazil are set to rise starting 1 October because domestic mills will respond to months of squeezed margins, rising input costs and a narrowing spread with imported products.
Brazilian mills have started telling regular clients of a price adjustment as of October, sources told Argus.
A major producer will increase hot-rolled coil (HRC) prices by 8pc and other steel products by 4pc, market participants said. Other steelmakers are likely to follow depending on buyer resistance and whether the new levels hold.
The hike is aimed at relieving pressure on margins, which have been compressed to the point where some lines were being sold below production cost, a source said.
The coming price hike follows a surge in feedstock costs, especially of iron ore and coal.
Brazilian mills attempted to stimulate demand by offering spot discounts over the past few months. These concessions eventually translated into lower list prices. Domestic HRC prices dropped to R3,450-R3,600/metric tonne ($651-665/t) in August, the lowest since Argus began assessing the market in July 2024.
The automotive sector, which has scaled back production, has largely driven the downturn in demand. Brazil produced 247,000 vehicles in August, down from 259,600 units a year earlier, data from automaker association Anfavea show. The auto industry accounts for over 35pc of Brazil's flat steel consumption.
High borrowing costs and increased competition from semi-assembled Chinese vehicles have further dampened steel demand from automakers.
Imported steel prices have also risen, driven by higher input costs in China and production cuts aimed at improving air quality. The spread between domestic and imported material narrowed, opening room for mills to push for higher prices in Brazil.
Despite the increase, domestic prices are unlikely to return to levels seen in January, when HRC exceeded R4,000/t.
A previous attempt to raise HRC prices by 4pc in early 2025 failed to hold because of low import prices and a stronger Brazilian real, which made seaborne material more competitive.
Still, this could mark the beginning of a broader upward trend, even as demand remains weak. Consumption is unlikely to gain significant traction before year-end because of broader economic pressures, sources said.
The domestic industry is also watching the outcome of ongoing anti-dumping investigations, which could result in surcharges on imported steel. The additional duties could support further price hikes domestically.
Brazil is investigating seven types of steel products for alleged dumping practices involving China, Japan, India, Germany, Indonesia, the Netherlands and Russia. Most cases focus on flat steel, with a recent review targeting wire rod from Russia and China.
The foreign trade secretariat will rule on investigations into pre-painted steel and cold-rolled coil in November, it said. A decision on the coated steel probe is scheduled for 12 January.
On 28 August, Brazil's foreign trade chamber imposed definitive anti-dumping duties on four types of steel sheets from China, ranging from $284.34-499.35/t.
