Brazilian flat steel stocks rose by 11.4pc to 1.12mn metric tonnes (t) in December from a year earlier amid softer demand over the holidays and strong import competition, Brazilian steel distributors' association INDA said.
Service centers and distributors also struggled to pass on the 8pc price increase imposed by mills in October, INDA said. The higher prices, combined with competition from imported steel, slowed sales in the last two months of the year and pushed inventories higher.
Hot-rolled coil and plate inventories rose by 9.5pc to 710,900t from 649,000t a year earlier, while cold-rolled coil and sheet stocks climbed by 48.1pc to 62,000t from 42,000t over the same period.
Coated steel inventories increased by 20.1pc to 173,200t from the previous year. Heavy plates stocks rose by 2.5pc to 183,200t in December from a year earlier.
Inventory turnover closed at 4.5 months, above the 2.9-month historical average. The figures cover only inventories at INDA members' warehouses, excluding stocks held by trading firms and non-affiliated service centers.
Service centers bought more than they sold in December, purchasing 298,200t against 248,300t in sales, pushing inventories nearly 50,000t higher for the month.
Distributors placed orders ahead of the price increase planned by mills for January in an attempt to keep their stock at a lower average cost, INDA president Carlos Jorge Loureiro said.
Mills raised prices in January but had to scale back the hike because elevated stocks at service centers and distributors, combined with low-priced import competition, weakened their pricing power.
Brazilian producers and buyers agreed on a 4pc price increase for domestic HRC and 2.5pc for other flat steel products, down from the 5-8pc initially proposed.
