Mr Marcos Sampaio da Fonseca president of national association of non ferrous, iron and steel scrap companies Inesfa told BNamericas that Brazilian long steel producers' plan to enforce a 15% price decrease for iron and steel scrap from July will negatively impact the scrap productive chain.
The main producers of long steel and the biggest consumers of scrap in Brazil are Porto Alegre based Gerdau, ArcelorMittal Brasil and Votorantim Siderurgia. In an effort to keep costs down, these players are also threatening to increase scrap imports if the sector does not accept the new prices.
Mr Fonseca said that scrap prices should follow trends in the steel and iron ore industries, which are forecast to increase. However, the firms' plan to push down scrap prices is a move in the opposite direction. He added that "The decision to force prices down also weakens the recycling chain. It will be a waste of natural resources and a step back for sustainability issues."
He said that at end 2009, scrap producers exported part of their production as domestic scrap prices were considerably pushed down, even though the Brazilian economy was recovering from the global crisis. He added that "It does not make sense for scrap producers to start exporting while steelmakers import. The balance of supply and demand in Brazil is adequate to make both sides competitive."
It may be noted that the demand for scrap in Brazil has consistently grown and the outlook for the sector is positive in 2010 due to the federal government's growth acceleration plan PAC, as well as the upcoming 2014 World Cup and 2016 Olympics.