SÃO PAULO Brazils association of flat steel distributors, Inda, expects a poorer performance this year on the back of a weaker-than-expected economy aggravated by social instability.
Sales in the distribution chain are not expected to grow beyond 2.5 percent this year, far below the 6 percent the association had been predicting until April, Inda president Carlos Loureiro told journalists June 25 in São Paulo.
Shipments totaled 1.79 million tonnes in the first five months of this year, down 2 percent from a year earlier mainly because of a surge in indirect steel imports. "The increase in these indirect steel imports is (a negative) for the Brazilian (steel) industry, as the replacement of these imports (by domestic production) is more time-consuming," Loureiro said.
Brazil also faces a challenging economic environment with an unusual blend of inflation and low growth rates. The countrys gross domestic product (GDP) had been expected at the beginning of the year to rise by 3.5 percent in 2013, but the latest forecasts point to growth rates below 2.5 percent.
Adding more pressure to the economy is the recent wave of riots, which have culminated in the biggest demonstrations in 20 years.
Such "turmoil" might cause "some production problems," Loureiro said. "There is a fall in retail sales, and when retail falls it affects the manufacturing industry. Everyone (in the steel distribution chain) has been facing more difficulties to sell."
A version of this article was first published by AMM sister publication Steel First.