The difficulties in obtaining credit in Brazil have been holding up an increasing volume of imports of steel products, even as domestic products hold a 15% premium over imported goods, said Carlos Loureiro, president of the flat steel association Inda.
The executive said the recent combination of a drop in Chinese prices for flat-rolled products and the appreciation of the real against the US dollar have opened a window for a hike in imports.
"Considering the Chinese price for hot-rolled coil at around $365/mt FOB and the current foreign exchange rate at around Real 3.25/$1, the domestic product has currently a premium of around 15% over the Chinese goods," he said.
"Although this would be a good scenario for a hike in imports, the lack of credit in Brazil is holding [up] import negotiations. It is being hard to get a letter of credit in Brazil," he said.
Besides the high premium and credit restrictions, Loureiro said poor demand for steel in Brazil persists, curbing the appetite for imports.
Given all these factors, Loureiro said, the prospective is for weak steel imports during the coming months.
"Imports will remain low for the next quarter. If it wasn't for the lack of credit, then we would see imports growing a bit," he said.
