SÃO PAULO — Sales by Brazilian flat steel distributors and service centers are expected to increase about 2 percent this year, according to Carlos Loureiro, president of Brazilian steel association Inda.

Flat steel sales are estimated to reach 4.37 million tonnes compared with 4.29 million tonnes in 2011, Loureiro told AMM sister publication Steel First.

A previous forecast of 6-percent growth was hit by the weak performance of the Brazilian industrial sector. "We couldn’t imagine that Brazil’s industrial activity would perform so badly in 2012," Loureiro said.

However, Brazil’s gross domestic product (GDP) is predicted to be stable in 2012 compared with the previous year, according to the Brazilian National Confederation of Industry.

Inda members are expected to sell 6 percent more flat steel products in 2013 compared with this year "if the industrial GDP recovers, growing by 3 to 4 percent next year," Loureiro said.

Government measures such as reduced energy prices and lower interest rates could contribute to stimulating local industrial activity, he said. "The Brazilian government, for instance, has reduced financing interest for the machinery and equipment sector, which can lift Inda’s shipments as this industry accounts for about 30 percent of our sales."

Loureiro believes the reduction in flat steel imports also may improve the outlook for Brazil’s domestic flat steel market in 2013. Flat steel imports are predicted to be steady this year but may decline next year as a result of a unified tax of 4 percent on the internal circulation of imported finished goods and services as well as higher import duties for cold-rolled coil and hot-dipped galvanized coil.

Flat steel prices in the Brazilian market are expected to be stable in the short term, with small adjustments planned by local mills.

"We’ll have ... new flat steel mills operating in the country next year, and the existing ones can’t forget that local competition will continue to be strong," Loureiro said, referring to Gerdau’s 770,000-tonne-per-year hot strip mill in Minas Gerais state, which is scheduled to come on-stream by January.

A version of this article was first published by AMM sister publication Steel First.