FoxBusiness.com quotes an analyst at an industry conference in Rio de Janeiro as saying on Tuesday Brazil’s steel industry is “almost at crisis point,” due to the country’s strong currency and soaring raw-materials costs.
Steelmakers have been hit by soaring prices for raw materials, including metallurgical coal and iron ore, prices for which reached record-high levels earlier this year. Some steelmakers have intensified their own iron-ore production activities in Brazil to shield themselves from high ore prices, but Brazil lacks sufficient coking coal resources.
“There’s been a sharp fall in Brazilian steelmakers’ profitability,” said Marcos Assumpcao, head of natural resources, equity research, at Itau BBA. “In early 2008, EBITDA margin levels were above 40%: they’re close to 10% now,” the analyst said at the Coaltrans congress in Rio de Janeiro.