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Brazil’s steel consumption should double within the next 10 years thanks to “gigantic opportunities” and a need to build more infrastructure in Latin America’s biggest economy, said ArcelorMittal SA’s executive in Brazil.
Demand for the industrial metal will potentially grow due to the need to build more housing, renewable energy projects, ports as well as oil-and-gas assets, especially if Brazil “does the homework” on structural reforms, Jefferson De Paula, president of ArcelorMittal Brazil, said in an interview.
“Brazil has gigantic opportunities,” said De Paula, who attended a Brazilian steel conference in Sao Paulo this week. “In terms of infrastructure, everything is lacking.”
Despite the talk of recession in economies around the world, demand for steel appears to be picking up if recent commentary from executives attending steel industry gatherings is to be believed. That may offer relief for Brazil, whose steel consumption has been stagnating for years relative to other countries.
Brazil’s annual steel use per capita was around 123 kilograms last year, compared to the global average of about 233 kilograms, according to the World Steel Association. Brazil’s steel industry, which is operating at about 67% capacity, is investing 52 billion reais ($10.2 billion) in the next four years to modernize and expand output, according the nation’s steel group Instituto Aço Brasil. A boost in output — even with higher domestic demand — may lead to more steel exports.
ArcelorMittal itself is investing close to 20 billion reais ($3.9 billion) in the South American nation, with nearly 40% of that for expanding production capacity by 2024 and $2.2 billion to buy Brazilian steelmaker CSP from shareholders including Vale SA. The takeover, which requires regulatory approval, doesn’t close the door on further deals in Brazil, a country that accounts for 20% to 25% of ArcelorMittal’s financial results, De Paula said.
“We can never say it was the last,” said De Paula, who’s also chairman of Instituto Aço Brasil. “We are always looking for opportunities.”
(By Mariana Durao)
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