SAO PAULO (Reuters) – Steelmakers continue to negotiate long-term price contracts with vehicle makers this year and the values to be set for 2022 could be 50% to 60% higher than this year, he said on Tuesday the president of the institute that brings together flat steel distributors, Inda.
“People are still negotiating…I believe in an increase of at least around 50% to 60%,” said Carlos Loureiro, president of Inda, at a press conference with journalists. The intensity of the readjustment is due to the fact that contracts with automakers, which normally come into force at the beginning of each year, passed a good part of 2021 without the increases applied to other sectors throughout the year.
The entity announced earlier that flat steel distributors in October had a 0.6% increase in sales compared to September, to 293.4 thousand tons, but a drop of 21.1% compared to October last year, when demand internal was still recovering from the impact caused by the first measures of social isolation caused by Covid-19.
The sector’s purchases, responsible for about a third of the consumption of steel produced by national mills, rose 3.5% in October in the monthly comparison and fell by 17.4% in the annual relation, to 286.3 thousand tons.
As a result, stocks in the sector ended last month at 826.2 thousand tons, equivalent to 2.8 months of sale. Inda’s forecast for November is that sales fall 3% compared to October and with that, inventories will rise to 2.9 months of sales, said Loureiro.
In the evaluation of Safra analysts, the numbers released by Inda were “good at first”.
“Both purchases and sales from distributors rose month by month, against expectations of a fall compared to September,” they stated. Analysts added that on the one hand the drop in inventories may support flat steel prices in the domestic market, but “on the other hand, it shines a yellow light on the interest of companies to maintain high volumes in a more troubled scenario”.
According to Inda figures, flat steel imports in October fell 31.5% compared to September, to 114,700 tonnes, but this would not represent the whole reality since the data obtained through the numbers of the Foreign Trade Secretariat (Secex) only consider material that is internalized, not stored in ports.
Loureiro mentioned that a “considerable volume” of flat steel imports made in recent months at higher prices than current ones has already arrived in the country, but has not yet been internalized. According to him, the port of São Francisco do Sul (SC) may have imported material stored in a volume of the order of “150 thousand to 400 thousand tons”.
“The people (importers) do not want to disclose the right number of material at the port because this could pressure prices down,” said Loureiro. “In view of this, the mills made some (price) concessions. Today, the price is trading 6% to 10% below what was the highest price. The parity became negative and is now positive around 10%.”
(By Alberto Alerigi Jr.)
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