Little has changed in the Brazilian steel market after nearly four months of a new tariff system intended to curb the increase of imported products. January-September imports rose by 24pc from the same period a year ago, totaling 4.6mn metric tonnes (t), surpassing what was expected for the full year. The tariffs, hailed by some market participants as missing the mark, was followed by other government measures, such as temporary antidumping measures and antidumping reviews. Industry group Aço Brasil's executive president Marco Polo de Mello Lopes spoke to Argus about the recent measures taken by the Brazilian government. This interview has been translated from Portuguese and edited for clarity.
The government's June decision imposed a quota system for importers, along with a tariff increase. How does Aço Brasil see that decision's effects now?
We are only four months into the tariff quota system. We have been following everything with a very large magnifying glass and we have some concerns.
The tariff quota system has not brought the expected reduction [to import volumes], though it is too early to reach a conclusion. But it brought a change in the trend of what had been happening.
At the beginning of the year there was an increase in products in general, but when you check June, July, August and September, you see that imports are decreasing every month.
As we had a very high first half, we did not reach what was expected in terms of imports. So far, we see that we have not achieved the reduction objective, but we have achieved the objective of stopping the escalation in relation to these imports.
What are Aço Brasil's main concerns with the June policy?
It was identified that there was an increase in imports from Egypt and Peru. Egypt has a preferential agreement in relation to what would be a Mercosur-Egypt agreement. We are already evaluating to see what to do specifically regarding the fact that imports are increasing using the trade agreement umbrella.
Another area of great concern is the excessive volume of imports that are entering through Manaus [the capital of northern Amazonas state]. It is strange that imports have increased without corresponding [demand] growth [at] the industrial park in Manaus. We continue monitoring to hold new meetings with the government.
Brazil's executive management committee of the chamber of foreign trade (Gecex) last week ruled on the tariff increase for some steel products regardless of the import volume, unlike the first decision by the committee earlier this year. What is Aço Brasil's view on that decision?
We understand that it is positive — it means there is recognition from the government that there are predatory imports that cause great concern in the sector. It couldn't have been any other way.
So [we see it as a] very positive [measure]. The claim that had been made since the beginning was a 25pc [tariff hike]. It was always 25pc because it is what the world has been practicing. If the government approves it, it is within what was expected.
What are the next steps for Aço Brasil to improve the situation for Brazilian steelmakers?
We will certainly make requests to change the system.
We are going to make some kind of movement, but it cannot be done now because there is already an [established] system. Imagine if companies that invested and spent energy and obtained a quota then had the government saying that they no longer have a quota, and could not challenge the decision in the courts.
Any changes that may be made must be made following the renewal process of the current system, which would be in June 2025.
