Steel prices expected to rise
On Wednesday Brazil's largest steel group CSN, said that steel prices in the domestic market are expected to rise by the end of the year, caused by high demand in the civil construction and caused infrastructure sectors.
A rise in the cost of steel could probably make way for another local price hike, the third year for two of Brazil's three largest steelmakers. Clients are likely prepared to deal with higher prices, as some sectors have the ability to absorb a readjustment in prices.
Further price increases for steel products used in construction and heavy manufacturing could put the government against the nation's steelmakers. Officials have threatened to cut taxes on some imported products this year to combat domestic steel prices rising.
On Tuesday CSN reported that during the second-quarter profits more than doubled to 894 million reais ($509 million), steel sales volumes surged 38 percent from last year's second quarter, with a strong recovery in foreign sales and a jump in local demand as Brazil's economy expanded at its quickest pace in at least 14 years.
Steelmakers began to increase prices of long and flat steel by 10 percent in the second quarter after the cost of iron ore, doubled since April. At the start of July, Usiminas one of CSNs rivals is the country's biggest maker of steel products for the auto industry; they have pushed for a 10 percent price hike in some items.
This caused Shares of CSN to tumble 3 percent to 29.30 reais on Wednesday. The stock has gained 8.1 percent this year, while the Brazil's main stock index Bovespa has remained fairly flat in the same period.
CSN Chief Financial Officer told analysts that the plan to spin off the company's mining unit is taking longer but will happen eventually. There was no timetable given for the transaction, which some analysts estimate could provide up to $2 billion in share sales.
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