SÃO PAULO, Brazil
The ongoing margin squeeze in the global steel industry coupled
with an overvalued currency and rising inflation in Brazil have
severely affected the Latin American nations slab
Prices for the semifinished
product have been "very low" in the international market, with
no expected near-term recovery, ArcelorMittal Tubarão
chief executive officer Benjamin Baptista told AMM
sister publication Steel First May 9 on the sidelines
of the 24th Brazilian Steel Congress, organized by the
countrys steel association, IABr.
"I wont tell you our sales
prices, especially because weve developed some specific
markets over the past years," Baptista said when asked about
current price levels for slab. He confirmed, however, that
prices of commodity-grade slab in the international market have
been below $500 per tonne f.o.b.
"This is the level of the
regular slab, but since our production has been low, weve
been focusing on more special products," Baptista added.
ArcelorMittal Tubarão has
been producing only 500,000 to 600,000 tonnes per year of slab
for export, in spite of having a surplus slab capacity of as
much as 3.5 million tonnes per year, the executive told
delegates earlier at the conference.
"We were the largest slab
exporter in the world, selling as much as 5 million tonnes per
year," he said.
For about 20 years, slab sales
were "very profitable" for the company, with average earnings
before interest, taxes, depreciation and amortization (Ebitda)
of $150 per tonne of sold slab in the 2005 to 2010 period,
according to Baptista.
"Ebitda reached as much as $280
per tonne in 2008those were good times," he said.
From 2010 onwards, however,
Ebitda in the Brazilian slab export business has been
"Thats why we decided to
stop our No. 3 blast furnace at the end of last year," Baptista
The steelmaker has now been
producing some 4.6 million tonnes per year of slabs, with 4
million tonnes per year feeding its hot-rolling facilities.
Low slab prices in the global
market, which led to a margin squeeze in the steel industry, is
one of the reasons for the cutback, Baptista said. The
over-valued Brazilian currency is another key factor, he said.
Inflation in Brazil in recent years has also had a significant
impact on steelmaker costs, the executive said.
Located in Espírito Santo state, ArcelorMittal
Tubarão has installed capacity to produce 7.5 million
tonnes per year of crude steel and 4 million tonnes per year of
A version of this story was first published in AMM sister
publication Steel First.