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Brazil Metallurgical market experienced an unprecedented downturn in 2015

26 January 2016

Brazilian Steel Institute Aco Brasil published data of the metallurgical sector in 2015. According to them, last year there was an incredible decline in the industry. Compared with 2014 the apparent consumption of steel products fell by 16.7%. Its volume amounted to 21.3 million. Tons. This December's backlog from the year-ago results showed 28.2%. Development of the Brazilian steel hit 33.24 million. Tons. Compared to the 2014 year the decline was only 1.9%. Brazilian steelmakers were able to mitigate the decline in domestic shipments by 16.1% compared to 2014. Compensation has occurred due to an increase in exports. He rose to the level of 13.7 million. Tons. The increase amounted to 40.3% compared to 2014 figures. At the same time, imports decreased by 19.3%. Its volume reached 3.2 mln. Tons.

According to the Ministry of Foreign Trade of Brazil export flat steel increased by 84.3%. In 2015 its volume amounted to 2.65 million. Tons. Increased volumes and external sales of semi-finished. The growth was mainly based on the intra-corporate deliveries. However, in late 2015 showed a decline in exports. There was a decrease due to countervailing and anti-dumping duties in the United States. As a result, Brazil's Usiminas has suspended steel production in January this year. The products are manufactured at the metallurgical plant Cubatao.

Reduced steel consumption in the country due to the economic downturn. Since the 90s this record levels, but with a negative value. International institutions assessed the situation for 2015. In their view Brazil's GDP fell by 3−3.5%. As some experts put it, Brazil has covered «perfect storm.» It was an incredible combination of adverse factors. These include and government failures, and problems with the exchange rate. It should also be taken into account and reduce the cost of the main export commodities. These include iron ore and soybeans.

In the current decade — its first half — the country maintained a high rate of real. The result was a drop in the competitiveness of Brazilian industry. In 2012, there was the fight against inflation by the Central Bank. It produces by raising interest rates. As a result, there was a decline in investment activity. In 2014, the dollar strengthening was observed. It led to a collapse of the local currency. The level reached the lower limit, as a result of observed difficulties with external debt. Falling incomes of citizens reduced the ability of the Brazilian consumer market.

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