Domestic steel sales, for instance, were predicted by the group to rise by 6.6% in 2018
on an annual basis, to 18.01 million tonnes.
But a continuing strike by truck drivers may prevent the steel sector from achieving Aço Brasil’s forecast figures
The strike has affected operations at 11 blast furnaces, 10 steel mills and 15 rolling mills, according to preliminary numbers estimated by market participants.
The strike action by Brazil’s truck drivers began in protest over recent increases in fuel prices and started on May 18, but protests and blockages intensified on May 21.
At that time, Brazilian state-owned oil company Petrobras said that the recent variations in the price of fuel reflected changes in international oil prices.
The government announced a deal with protesters on May 27, although a smaller number of blockages of some major roads remained, according to local media reports.
As a part of the deal with the truck drivers, the government committed to promoting a reduction in diesel fuel prices, and proposing laws to establish minimum freight prices and reductions in toll rates.
Supplies of ferrous scrap and other steelmaking raw materials such as lime and coal were the first to be affected by the drivers’ actions.
The country’s main roads were blocked
and an average of only 10-20% of regular scrap deliveries were being made in the week starting May 21, according to national ferrous scrap institute Inesfa.
Also, all pig iron production facilities in Brazil came to a halt that week
because of the action, which prevented producers from receiving coal deliveries to feed their furnaces.
Meanwhile, Brazilian iron ore producer CSN Mineração was experiencing production and logistics issues
because of the strike, and declared force majeure
Brazilian miner Vale also said on May 29 that it could cut production in the following few days
if the situation persisted.
For steel producers, the strike initially caused delays to local steel shipments
, because they depend on truck transportation.
Deliveries from Brazilian flat steel distributors, for instance, were down to 10% of the usual average volume
due to the protests.
But the shortage of crucial steelmaking raw materials, including pig iron, lime and scrap, then forced national mills to cut or even stop production
Gerdau, Usiminas, CSN, ArcelorMittal and Vallourec all reported output disruptions
, with some furnaces and rolling lines operating at minimum levels.
Other slab producers, such as Ternium Brasil (formerly CSA) in Rio de Janeiro state and Companhia Siderúrgica do Pecém (CSP) in Brazil’s north-eastern Ceará state, were also reported to be suffering from raw materials shortages.
And finally, the steel supply chain was severely affected by the strike action
, with national automotive association Anfavea saying that all vehicle production lines had been stopped as a consequence of the strike.
The situation is starting to improve, with the number of protests diminishing, but it is still not safe to say when Brazilian industrial activity will return to normal and get back to the levels seen before the strike action.
Felipe Peroni in São Paulo contributed to this report.