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...

BMI Industry View
7
Stronger Outlook By Latter Half Of Decade
7
SWOT
9
Metals SWOT
9
Industry Forecast
11
Steel: Weak 2015 To Give Way To Stronger Growth
11
Consumption Facing Weak 2015
11
Production Surpluses Ahead
13
Table: Steel Production & Consumption (Brazil 2010-2018)
14
Table: Steel Industry Historical Data (Brazil 2005-2013)
14
Aluminium: Demand To Outpace Production
15
Constrained Production On High Electricity Costs
15
Demand Fundamentals Stronger Than Supply Outlook
17
Table: Aluminium Production & Consumption (Brazil 2010-2018)
19
Copper: Growth To Come Following Weak 2014
20
Consumption To Outpace Production
21
Table: Refined Copper Production, Consumption & Balance (Brazil 2010-2018)
21
Regulatory Development
22
Tax Regime
22
Government Steadily Tackling Persistent Corruption
23
Table: Brazil - Political Overview
23
Commodities Forecast
25
Table: BMI Steel Price Forecast
25
Short-Term Outlook (three-to-six months)
25
Long-Term Outlook
26
Production Growth Set For Slowdown
27
Consumption Growth To Disappoint
28
Downside Risks To Price Outlook
29
Table: Steel Data & Forecasts
30
Commodity Strategy
31
Ferrous Metals
31
Non-Ferrous Metals
33
Aluminium: Ending 2014 On A Whimper
33
Copper: More Weakness Ahead
35
Nickel: Modest Rebound To Be Limited By Ample Supply
37
Zinc: Sideways Trading On Diverging Supply & Demand Dynamics
38
Table: Select Commodities - Performance & BMI Forecasts
39
Competitive Landscape
41
Table: Financial Data For Key Metals Firms Listed In Brazil
41
Energy Costs Top Headwind
41
Company Profile
43
Gerdau
43
Latest Financial Results
45
Table: Gerdau - Key Financial Data
45
Cia Sider-rgica Nacional
46
Latest Financial Results
48
Table: CSN - Key Financial Data
48
Global Company Strategy - Vale - Q1 2015
49
Company Overview
51
Company Strategy
52
Latest Results
53
Table: Vale - Supply Chain Analysis
54
Table: Vale - Key Financial Data
54
Company Details
55
Methodology
56
Cross Checks
56

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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