Brazil-based iron ore and flat steel producer CSN is optimistic about the domestic steel market for the next few quarters, and expects to see reduced input costs and higher steel prices, sales director Luis Martinez said in a conference call for investors and analysts on Friday May 11.
Production costs for slabs are to decline to $480-490 per tonne in the current quarter of 2012, from $550 per tonne in the first quarter, he said.
Costs for pulverized coal injection (PCI) coals from both India and Colombia fell to $190 per tonne from $245 per tonne, while coke costs are currently $420 per tonne.
The company’s iron ore costs, on the other hand, are expected to be stable for the next few quarters, Martinez said.
CSN believes there is a room for domestic flat steel prices to increase by 5-10%, despite the falls in raw material costs.
“A rebound in prices may occur soon,” Martinez said.
“The reduction in our costs for slabs enables us to introduce a 5-10% hike in prices, lifting our margins to 32% from 20%,” he added.
The steelmaker also expects reduced import levels to help boost its sales in the domestic market.
Flat steel imports will total 1.2-1.3 million tonnes this year, down from 2.2 million tonnes and 4.03 million tonnes in 2011 and 2010 respectively, Martinez said.
CSN intends to allocate 85% of its total steel sales to the Brazilian market this year as a result.
“Exporting steel will be profitable again when the currency rate hovers between 2.09 and 2.37 Reais to dollar,” Martinez commented.
Currently, $1 dollar is worth about 1.95 Reais.
Ana Paula Camargo