BNamericas reported that Brazil''s national association of non ferrous, iron and steel scrap companies Inesfa has confirmed a price cut for steel and iron scrap being enforced by local long steel producers from July 1st 2010.
Mr Marcos Sampaio da Fonseca president of Inesfa told BNamericas that the main producers of long steel and the biggest consumers of scrap in Brazil namely Gerdau, ArcelorMittal Brasil and Votorantim Siderurgia have enforced a price cut of 15% to 20%, exceeding Inesfa''s initial estimate of a maximum 15%.
Mr Fonseca said that the average price for scrap in Brazil is now at BRL 400 per tonne. He added that long steel producers have been looking to international markets in search of cheaper prices and threatening to increase scrap imports, which would damage the local scrap industry.
Inesfa''s main concern is that the price cuts will weaken the recycling chain and lessen recycling volumes in the country. However, the scrap industry will continue to supply the domestic market despite the price decrease.
Mr Fonseca said that "We will only look to export if there is a surplus of scrap domestically. But I believe the local market will absorb the available material."
The outlook for local demand is favorable in 2010 due to the federal government''s growth acceleration plan PAC, as well as the upcoming 2014 World Cup and the 2016 Olympics, which will require large investments in civil construction and infrastructure.