Brazil Metals Report

Published 06 January 2015

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Brazil Metals Report

BMI View: Metals production and consumption in Brazil will remain vulnerable heading into 2015 on account of persistently high energy costs and weak economic growth. However, acceler ating growth in the years ahead, driven by gains in the automotive, construction, and infrastructure sectors , will underpin expansion in the metals sector .

Stronger Outlook By Latter Half Of Decade

Metals consumption and production will face headwinds into 2015 on account of modest economic growth ( see ' Growth To Disappoint Again In 2015 ,' November 5). We forecast real GDP growth of just 1.0% in 2015 on the back of sluggish private consumption, subdued fixed asset investment, and a weak business environment. Moreover, electricity costs remain elevated, raising costs for the energy-intensive metals industry. Nevertheless, our multi-year outlook towards Brazilian economic growth, as well as key sectors, is more constructive. The automotive, construction, and infrastructure sectors will see expansion in the years ahead, driving metals demand and hence production, by the latter half of the decade. Additionally, we expect refined copper production and consumption to outperform other metals on account of the metal's widespread usage in multiple sectors and continued investment in productive capacity from Paranapanema, the country's largest producer.

Industry Prospects Brightening
Brazil - Real GDP & Fixed Capital Formation (% chg y-o-y)

Most of the metal produced in Brazil will be consumed domestically, providing an opportunity for companies to increase revenue and profit in the years ahead as economic growth improves. We expect domestic aluminium and copper demand to exceed production, in contrast to steel, which will see production levels exceed consumption. While firms will be able to take advantage of stronger economic fundamentals on one hand, they will also face constraints from Brazil's complex tax and regulatory environment on the other. The latter will add to...

Table of Contents

BMI Industry View
7
Stronger Sector Performance In Latter Half Of Decade
7
SWOT
9
Metals SWOT
9
Industry Forecast
11
Steel: Consumption And Production To Grow At Moderate Pace
11
Consumption Facing Multi-Quarter Weakness
11
Production To Exceed Domestic Demand
13
Table: Steel Production & Consumption (Brazil 2010-2018)
14
Table: Steel Industry Historical Data (Brazil 2005-2012)
14
Aluminium: Production To Face Multi-Quarter Headwinds
16
Electricity Prices To Reduce Production
16
Consumption Growth To Outpace Production
18
Table: Aluminium Production & Consumption (Brazil 2010-2018)
19
Copper: Stronger Growth In Years Ahead
20
Consumption To Outpace Production Capacity
21
Table: Refined Copper Production, Consumption & Balance (Brazil 2010-2018)
21
Regulatory Development
22
Tax Regime
22
Corruption To Persist
23
Table: Brazil - Political Overview
23
Commodities Forecast
25
Commodity Strategy
25
Ferrous Metals:
25
Non-Ferrous Metals:
29
Aluminium: Prices To Remain Elevated Following Recent Dip
29
Copper: Chinese Weakness To Create Further Headwinds
30
Nickel: No Sustained Rally Ahead
32
Zinc: Subdued Short-Term Outlook Before Multi-Year Gains
35
Table: Select Commodities - Performance And BMI Forecasts
36
Steel: Prices To Head Higher From 2016
37
Table: BMI Steel Price Forecast
37
Short-Term Outlook (three-to-six months)
37
Long-Term Outlook
38
Production: Chinese Rationalisation Measures To Bite
39
Consumption: Slowing Demand Growth On The Horizon
40
Burgeoning Chinese Exports Will Not Last
41
Eurozone Growth Downgrade Highlights Long Road To Recovery
42
Risks To Price Forecast
42
Table: Steel Data & Forecasts
43
Competitive Landscape
44
Table: Financial Data For Key Metals Firms Listed In Brazil
44
Energy Costs To Prove Problematic
44
Company Profile
46
Gerdau
46
Latest Financial Results
47
Table: Gerdau - Key Financial Data
48
Cia Sider-rgica Nacional
49
Latest Financial Results
51
Table: CSN - Key Financial Data
51
Vale
52
Company Overview
54
Company Strategy
55
Latest Results
56
Table: Vale - Supply Chain Analysis
57
Table: Vale - Key Financial Data
57
Company Details
58
Methodology
59
Cross Checks
59

The Brazil Metals Report has been researched at source, and features latest-available data for steel, aluminium and other major globally-traded commodities. Our analysis covers all primary indicators, including production, exports and price, with our forecasts underpinned by BMI Research's macroeconomists global economic outlook. The report analyses trends and prospects and critically evaluates latest industry news, trends and regulatory developments in Brazil.

BMI's Brazil Metals Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the metals industry in Brazil.

Key Benefits

  • Benchmark BMI's independent metals industry forecasts for Brazil to test other views - a key input for successful budgeting and strategic business planning in the Brazil metals market.
  • Target business opportunities and risks in Brazil through our reviews of latest industry trends, regulatory changes and major projects and investments.
  • Exploit the latest competitive intelligence and company profiles on your competitors and peers.

Coverage

BMI Industry View

A comprehensive summary of the impact and implications of the latest regulatory developments and key forecast indicators covering metals production, consumption and upside/downside risks to our outlook. The Metals SWOT analysis outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.

Industry Forecast

Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:

  • Steel: Steel production & consumption (‘000 tonnes).
  • Aluminium: Aluminium consumption production & balance (‘000 tonnes).
  • Copper: Refined copper production & consumption (‘000 tonnes).
  • Zinc: Refined zinc production & consumption (‘000 tonnes).
  • Lead: Refined Lead production, consumption & balance (‘000 tonnes).
  • Nickel: Refined nickel production & consumption (‘000 tonnes).
  • Tin: Refined tin production, consumption & balance (‘000 tonnes).

Regulatory Development

Details of the industry regulatory framework, relevant key legislation and environmental standards that impact the metals industry. The regulatory developments section provides analysis of the overall regulatory burden, the tax regime (including income tax rates), bureaucratic framework, corruption and a country specific political overview. Details of the industry regulatory framework provide information on relevant key legislation and regulations that will impact the metals industry.

Commodities Forecast

Provides in depth coverage and forecasting of steel prices and includes BMI’s core view of what to expect in upcoming months. Within the monthly metals update, BMI provides performance data and key forecasts for select commodities, including prices for aluminium, copper, gold, iron ore, lead, nickel, palladium, platinum, silver, steel (MEPS Carbon Steel), tin and zinc.

Competitive landscape

The competitive landscape section provides comparative company analyses of detailed financial data for key listed metals firms, ranked in order of market cap (USDmn).

Company Profiles*

Examines the competitive position and short to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects. Details of products and services provide a full overview of each company’s operations.

Sources

The Metals Reports draw on an extensive network of primary sources, such as manufacturing associations, statistical bureaus, government ministries, national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc