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An overview of the steel industry in Brazil and its impact on the economy

The companies in the steel industry are essential in the lives of the vast majority of people. After all, its product is steel, a fundamental input for the manufacture of various items that are part of everyone’s daily lives.

Among these items, we can mention home appliances, automobiles, and civil construction as a whole. Therefore, it is a very important area for the country’s economy.

Taking this scenario into account, it is important to understand, through an overview, the situation of the steel industry in Brazil and how it contributes to the economy.

Main inputs in the steel industry and steel production

For all sectors of the economy that rely on steel to be supplied, production must take place on a large scale. For this, inputs such as iron ore and coal are used.

Iron ore is widely available in the national territory and is of good quality. On the other hand, coal is scarce in Brazil and of low quality. As a result, to use coal it is necessary to import this input.

Being important for the economy, Brazilian steel is competitive in the international market. Some aspects that contribute to this are:

  • Brazilian iron ore is internationally recognized for its high iron content and low cost.
  • Furthermore, the cost of labor is cheap when compared to other steel-producing countries.
  • The logistics of the steel industry in Brazil is favorable, due to the location of industries in relation to ports, railways, input sources, and production facilities.

As a result of these advantages, Brazil is one of the largest steel producers in the world. The production of the commodity takes place in 10 Brazilian states, with the states in the Southeast region being the most prominent.

However, the complete list of states follows: Rio Grande do Sul, Paraná, São Paulo, Rio de Janeiro, Espírito Santo, Minas Gerais, Bahia, Pernambuco, Ceará and Pará.

As Brazil produces quality steel on a large scale, this is a product that is exported to many countries. Therefore, steel companies are very important for the economy and also for the generation of jobs for those looking to pursue a profession in this sector.

Investments in the steel industry in Brazil

In 2020, when the COVID-19 pandemic had its first effects on the economy, many steel industries shut down their furnaces. After all, there was no demand for steel and this decision had to be made.

However, when demand began to increase in 2021 with the return of civil construction, the sector faced supply problems. This is because it takes about 6 months to turn the ovens back on.

As a result, steel prices have risen sharply, which is likely to change as the economy recovers.

Why does Brazil invest in steel industries?

As mentioned above, there are several advantages that make steel production very competitive in Brazil. Having an input such as high-quality iron ore for the production of steel in the country contributes to investments being made.

Although the country is strong in the sector around the world, it is necessary to maintain investments in the modernization of industries and the logistical system involved in production. Thus, the commodity continues to be valued in the country and the nation is increasingly gaining recognition and appreciation.

Main steel industries in Brazil and their contributions to the economy

CSN

A company that operates in the entire steel production chain, therefore from the extraction of iron ore to the completion of production and selling of products. These high added value products include galvanized coated flat steel and sheet metal.

In 2021, the company went public as CSN Mineração. The purpose of this opening was to raise funds to complete the company’s deleveraging process, and the result is the generation of great value for shareholders.

In addition, the company has an ambitious expansion project, called the Itabiritos Project. With this, CSN wants to reach the annual production of 108Mt in 2032, supplying products with high iron content, which is around 67%.

Gerdau

Gerdau is the largest Brazilian company that produces steel, and is one of the main exporters of long steel and special steel to different parts of the world.

For the Brazilian market, there is also the production of flat steel, in addition to the iron ore that the company itself consumes. As it is a large Brazilian company, it is possible to find Gerdau shares listed on the São Paulo stock exchange (B3), but also in New York (NYSE) and Madrid (Latibex).

Among the company’s highlights is its constant innovation. Investment is high in technology, with a focus on new businesses and the profitability of the business. Today, Gerdau is considered one of the most innovative and modern companies in the steel industry in the world.

Usiminas

It is a company recognized for its large production of flat steel, with operations in several segments of the production chain: mining, logistics, capital goods, service centers, and distribution of customized solutions.

As the market and the steel industry improve their demand in 2021, Usiminas is also benefiting. There is an expansion of sales, monitoring, and market growth.

ArcelorMittal

The ArcelorMittal group is one of the largest steel producers and miners in Brazil, with customers in 160 countries.

The group has 11 research centers and a large structure across the country. And there are several job positions filled by those who follow a profession in the area.

Future perspectives for the steel industry in Brazil

As you noticed during the text, the steel industry in Brazil is of great importance to the country’s economy.

And with the advancement of the economy, the scenario is increasingly positive for the sector. Especially considering the increasing demand coming from civil construction, which uses a lot of steel produced by the steel industry.

Companies must continue investing in modernization and better ways to produce steel, in order to further improve the sector.

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