Brazilian car output at risk of April stoppages on coronavirus disruptions

Car production in Brazil is at risk of suffering stoppages by April, if supply constraints affecting Chinese auto parts providers do not improve amid the outbreak of the novel coronavirus (2019-nCoV), according to Brazilian national car association Anfavea.

The association highlighted that car manufacturers currently have enough parts to maintain output during March.
“A [significant portion] of our imports come from Asia, especially China,” Anfavea president Luiz Carlos Moraes said on Friday March 6.
But he emphasized that, at the moment, there has been no interruption in car output. “There is a risk, but so far it is under control,” he said.
If there are interruptions in output, the association remains confident the automakers will be able to make up for lost production in future months and meet the forecast to produce 3.16 million vehicles in 2020. If achieved, the figure would represent an increase of 7.30% from 2019’s 2.94 million units.
Brazilian steel producers imposed an increase of around 5% in annual pricing contracts with automakers earlier this year.
And steel producer CSN has plans to renegotiate the annual increase, since it has been applying consecutive price rises to distributors mostly because of the recent devaluation of the Brazilian Real.
Fastmarkets’ latest price assessment for steel hot-dipped galvanized coil, domestic, monthly, exw Brazil, was 3,110-3,140 Reais ($676-682) per tonne on February 14, up from 3,020-3,140 Reais per tonne on January 3.
Brazil produced a total 204,200 vehicles in February, down by 20.80% from the same month a year earlier, when output was at 257,900 units.
Vehicle sales to the domestic market amounted to 201,000 units, an increase of 1.20% from the 198,600 units sold in February 2019.
Exports in February came to 37,700 units, down by 7% from the 40,500 units exported in the same month in 2019.

Felipe Peroni

felipe.peroni@fastmarkets.com

Published

Felipe Peroni

March 09, 2020

08:53 GMT

São Paulo