Brazil's Usiminas plans to raise steel prices, reopens furnace
Brazilian steelmaker Usinas Siderurgicas de Minas Gerais SA reactivated a blast furnace on Tuesday and announced plans to raise domestic steel prices in June, but executives warned that new investment would depend upon political developments.
Shares of the company, known as Usiminas, rose over 2 percent on Tuesday on the outlook for stronger steel demand, driven by a growing recovery in Brazil's auto industry.
The reactivated furnace in the state of Minas Gerais has the capacity to process 650,000 tonnes of pig iron annually.
Chairman Elias Brito told journalists that Usiminas was working out a long-term investment plan that would depend on the outcome of Brazil's general elections in October.
"The indications we have for this year point to a small amount of growth, but without doubt the principal risk is politics, the type of government the country will have," Brito said. "The principal analysis of the (investment) plan involves verifying that growth has come to stay."
The imprisonment of Luiz Inacio Lula da Silva, a former president and the leftist front-runner in recent polls, has thrown the presidential race wide open, boosting the odds of a political outsider riding a wave of discontent.
Brito added that the board of Usiminas has not discussed selling nor restarting operations at a major raw steel plant in the southeastern city of Cubatão.
Chief Executive Sergio Leite told journalists the steelmaker plans to raise steel prices in June. Usiminas expects increased sales in Brazil this year, he said, but the company will not export to the United States in 2018.
Shares in Usiminas rose as much as 4.2 percent on Tuesday on news of the restarted furnace in Ipatinga, but later pared gains to close 2.1 percent higher at 10.24 reais.
Reporting by Alberto Alerigi; writing by Gram Slattery, editing by G Crosse.