Brazil's steel distribution sector increased purchases by 85% to 2.35Mt in the first six months of this year, leading to a record stock level of 1.2Mt, according to the president of local steel distributor Frefer, Christiano da Cunha Freire.
The inventory is enough to supply the domestic market for 3.6 months, compared with a historical average of 2.7 months.
Through 2008, stocks stood at an average of 800,000t.
However, purchases from mills have already experienced a significant drop and stocks are expected to return to more favorable levels over the next three months, according to the executive.
From January to June, distribution sales totaled 1.97Mt, up 28% year-on-year. For the full year, national steel distributors association Inda is forecasting sales to reach 4Mt compared to 3.39Mt in 2009.
While sales have been increasing over the last few months, the pace has not been as fast as in Q1 or in the last quarter of 2009, Freire said at the Latin American Iron & Steel Trends conference, held in Rio de Janeiro last week. The executive also said that while the market remains strong, it has not fully returned to pre-crisis levels yet.
With Brazilian steelmakers increasing their prices and end users calling for decreases, the distribution sector will face an imbalance through the end of the year. However, Freire expects prices in the distribution chain to remain steady in H2At the same time, some distributors have been turning to the international market where prices are approximately 15% less, Freire said. Imports have been increasing and currently supply approximately 25% of local demand.
By Fernanda De Biagio
The inventory is enough to supply the domestic market for 3.6 months, compared with a historical average of 2.7 months.
Through 2008, stocks stood at an average of 800,000t.
However, purchases from mills have already experienced a significant drop and stocks are expected to return to more favorable levels over the next three months, according to the executive.
From January to June, distribution sales totaled 1.97Mt, up 28% year-on-year. For the full year, national steel distributors association Inda is forecasting sales to reach 4Mt compared to 3.39Mt in 2009.
While sales have been increasing over the last few months, the pace has not been as fast as in Q1 or in the last quarter of 2009, Freire said at the Latin American Iron & Steel Trends conference, held in Rio de Janeiro last week. The executive also said that while the market remains strong, it has not fully returned to pre-crisis levels yet.
With Brazilian steelmakers increasing their prices and end users calling for decreases, the distribution sector will face an imbalance through the end of the year. However, Freire expects prices in the distribution chain to remain steady in H2At the same time, some distributors have been turning to the international market where prices are approximately 15% less, Freire said. Imports have been increasing and currently supply approximately 25% of local demand.
By Fernanda De Biagio
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