Wire rod not included in cut in Brazil's rebar import duties, Aço Brasil says

A Brazilian government resolution to cut import duties on steel rebar until the end of 2022 will not be valid for wire rod, steelmakers’ association Instituto Aço Brasil told Fastmarkets on Thursday May 12.

There was initially some confusion in the market after a publication in the country’s official gazette on Thursday included a tariff code sometimes related to wire rod. Local media outlets have also been reporting wire rod as a steel product on which tariffs would be reduced.
Alongside CA50 and CA60 rebar grades (tariff code 7214.20.00), the document in the official gazette showed the tariff code for wire rod (7213.10.00) as another material that would have import taxes reduced to 4% until the end of December, from 10.8% currently.
And the ministry told Fastmarkets earlier on Thursday that the decision covered both tariff codes, without providing further clarification.
“That is correct - both tariff codes will have their import taxes cut,” a spokesperson said.
Fastmarkets asked for more detail, but had received no further reply at the time of publication.
Traders and importers were confused by the move, however. The ministry only mentioned rebar in its press releases on the matter and in the press conference that followed on May 11, but media reports were mentioning wire rod.
Some market participants were assuming that the tariff code would relate to wire rod as well, but others said it was only for rebar in coils.
“The ministry probably decided to include [the 7213.10.00 code] to prevent rebar from being imported under the code for wire rod,” one trader source said.
A second trader suggested that “there will be a problem if this wire rod code refers to rebar, since it will demand new certification for those products.”
In the past, there have been reports in the market of importers bringing wire rod into the country under the 7213.10.00 tariff code.
Later on Thursday, however, Aço Brasil said that the tariff code was indeed for rebar in coils, and was not intended to include wire rod.
“Because coiled rebar is a long hot-rolled steel product supplied in coils, it is classified under the same chapter as wire rod,” an Aço Brasil spokesperson told Fastmarkets. “I reiterate that ‘plain’ wire rod, mainly used in drawing and other processes, did not have its rates reduced.”
A third trader source said that this confusion could lead to higher demand for imported wire rod, despite international prices being similar to domestic levels.
“A client was waiting for a decision on import duties to decide whether to import wire rod. So, it would be positive if wire rod was included in that measure,” a fourth trader source said.
Rebar prices in Brazil have been recovering since the end of the first quarter, closing a gap to global prices and amid stronger demand in the country.
Fastmarkets most recently assessed the price for steel reinforcing bar (rebar), domestic, monthly, delivered Brazil, at 4,700-4,940 Reais ($916-962) per tonne on April 8. This was up by 7.95% from 4,330-4,600 Reais per tonne on March 11 and 9.36% higher than 4,215-4,600 Reais per tonne on February 11.
Market participants have since reported that local steelmakers announced a 10-15% price increase for May orders. Fastmarkets’ next monthly price assessment will be published on May 13.

Felipe Peroni

felipe.peroni@fastmarkets.com

Renato Rostás

renato.rostas@fastmarkets.com

Published

Felipe Peroni

Renato Rostás

May 12, 2022

15:55 GMT

São Paulo