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Brazilian steelmakers expect better 2H

  • : Metals
  • 24/08/13

Brazilian steelmakers expect better results in the second half of the year, as they stand to benefit from higher tariffs on imported steel and a potentially improved economic situation.

The top producers have so far reported mixed results for the second quarter, with Gerdau, Usiminas and CSN posting higher sales volumes and production but also losses and lower revenues.

Yet there was a consensus that recently announced new tariffs on imported steel are likely to improve results in the coming quarters.

The Brazilian government announced in May it would impose a new quota and tariff system on imported steel to protect local production from unfair competition. The government outlined a 25pc tariff on the share of imports that exceeds volume quotas.

The move led some companies to notify clients of price increases, claiming much needed adjustments.

CSN said on an earnings call that it plans to raise prices for its steel products in the third quarter as a part of its "price realignment."

In late July, Usiminas said it plans to increase prices by 5-7pc in the coming months.

An expected price hike by Gerdau would improve the company's profitability for its Brazilian operations, XP analysts said in a report.

The recent hastening of the dollar appreciation against the Brazilian real — by over 12pc year-to-date — will also drive better results for companies in the coming months, according to analysts.

Although Usiminas suffered losses because of the dollar appreciation, as it is a major importer of slab, it — and other companies — might benefit from higher prices of other imported products.

A stronger dollar to the Brazilian real could "reduce the impetus for imports," MonteBravo brokerage analysts said in a report on Gerdau.

A third component for better results in the coming quarters could be stronger demand from Brazil, boosted by improving economic growth and aligned with the continuation of support from North American volumes, which the companies highlighted in their earnings.

"Brazil's steel demand is resilient and prices are showing signs of improvement," Goldman Sachs analysts said in a report about CSN. "We then expect steel earnings to improve."

Despite the optimism, the negative scenario for these companies could not be reversed this year, Genial analysts said, adding that Chinese steelmakers will keep prioritizing exports because of weakened domestic demand.

"Brazil, for its part, remains a market with a complex and potentially ineffective tariff protection system, due to the additional quota system," the analysts said.


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24/11/05

Boeing workers approve contract, end strike: Update

Boeing workers approve contract, end strike: Update

Includes additional contract details in 3rd and 4th grafs, and background on Boeing. Houston, 5 November (Argus) — Union-backed machinists approved a new labor contract with aircraft manufacturer Boeing, ending a seven-week work stoppage that halted production of major jet programs and disrupted aerospace supply chains. More than 32,000 factory workers represented by the International Association of Machinists and Aerospace Workers (IAMAW) voted by 59pc to ratify the deal, the local union said late Monday. Employees secured a general wage increase (GWI) of 38pc spread out over the contract's four-year life, a one-time $12,000 ratification bonus and greater 401(k) contributions, among other retirement and health care benefits. The pay raise — a sticking point in prior rounds of negotiations — improved upon Boeing's first two offers of 25pc and 35pc but fell short of the 40pc sought by workers. Still, the union touted that the GWI in the new contract amounts to 43.65pc when compounded. Boeing chief executive Kelly Ortberg acknowledged the past few months "have been difficult" in expressing his appreciation that both sides were able to come to terms. Workers began their strike on 13 September, effectively shutting down Boeing's final assembly lines in Renton and Everett, Washington, where the company produces its flagship 737 MAX aircraft, along with its 767 and 777 programs. That stoppage further exacerbated issues within Boeing's operations that have been under heightened scrutiny since January, when a midair panel blowout led to a mandated production cap on the 737 MAX. Additionally, parts shortages and other supply chain challenges have constrained output of the company's main widebody program, the 787 Dreamliner, this year. The strike itself compelled Boeing to initiate cost-cutting measures with the production halt weighing on its finances . The company on 11 October announced it would lay off 10pc of its total workforce, while confirming on 23 October that it had stopped shipments from certain suppliers to conserve cash. The latest estimate from Anderson Economic Group, which does not account for last week, puts Boeing's losses at $5.5bn and its suppliers' losses at $2.3bn because of the work stoppage. All workers must return to their positions by 12 November but can return as early as Wednesday, the union said. Still, Boeing cautioned that it would take time for operations to stabilize, saying it would have to retrain and recertify employees who did not "get enough time on an airplane" before they went on strike. The company also will have to contend with a supply chain that it "turned off in many cases" because of the work stoppage. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Boeing workers approve contract, end strike


24/11/05
24/11/05

Boeing workers approve contract, end strike

Houston, 5 November (Argus) — Union-backed machinists approved a new labor contract with aircraft manufacturer Boeing, ending a seven-week strike that halted production of major jet programs and disrupted aerospace supply chains. More than 32,000 factory workers represented by the International Association of Machinists and Aerospace Workers voted by 59pc to ratify the deal, the local union said late Monday. Employees secured a general wage increase of 38pc spread out over four years and a $12,000 ratification bonus, along with other retirement and health care benefits. All workers must return to their positions by 12 November but can return as early as Wednesday, the union said. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US railroad-labor contract talks heat up


24/11/04
24/11/04

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US light vehicle sales hit 6-month high in Oct


24/11/04
24/11/04

US light vehicle sales hit 6-month high in Oct

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Mexico GDP outlook dims in October survey


24/11/04
24/11/04

Mexico GDP outlook dims in October survey

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