Unfinished US steel imports likely to grow

With fewer blast furnaces operating in the United States, there will be more demand for imported unfinished products that could benefit Brazilian steelmakers, an expert told BNamericas. Between 1990 and 2003 the number of blast furnaces operating in the Nafta trade bloc (US, Canada and Mexico) fell from 60 to 42. Forecasts are that the trend will continue with the number dropping to 38 in 2005 and 34 in 2010, said the expert, Germano Mendes de Paula, an economist specializing in steel at Brazil's Federal University of Uberlandia. "Considering the long-term tendency, there is a clear movement toward fewer blast furnaces with the closure of smaller ones. This fall is fundamentally concentrated in the US," Paula said. With many US steel companies in financial trouble, most investors are unlikely to burden themselves with long-term costly investments in a new blast furnace or even for revamping existing ones, he said. "With restrictions on financing in general, companies are seeking resources for activities that add greater value, in which reduction, such as blast furnaces and coking plants, do not fit in," said the academic, who added that reduction activities are highly polluting. The main question is how quickly unfinished steel exports to the US will grow, he said. "My opinion is that the rhythm tends to be slower than generally believed, since the historical evidence shows that in practice, be it pressure from unions or from local governments, integrated steel mills end up restarting their activities even if under another name," Paula said. Some of the companies have been saved more than twice, he said. Last year, Brazil exported 2.72Mt of unfinished steel to the US.