Global Steel Trade; Structural Problems and Future Solutions

companies have maintained their relative shares of the total domestic carbon flat-rolled market at
practically the same level from 1994 through 1998: CSN holds the largest share at approximately 39
percent, Usiminas follows with approximately 35 percent, and Cosipa is third with approximately 26
percent (Chart 3-38). Despite increases and decreases in total domestic sales of carbon flat-rolled steel
products over the years, these three producers have maintained relatively constant shares of the market. In
addition, an analysis of the
production shares of carbon
flat-rolled steel products from
1993 to 1998 indicates
remarkably consistent shares
maintained by each of the three
companies. In terms of
quantities produced, CSN had
approximately 40 percent,
Usiminas 35 percent and
Cosipa 25 percent during that
period. 14 This contrasts with
the varying production shares
by major U.S. steel producers
during the last several years. 15
The consistent market and
production shares of Brazilian
producers do not themselves
prove the existence of
anticompetitive behavior.
However, when considered
together with the legal
Percent Share of Market
50
40
30
20
10
0
1994 1995 1996 1997 1998
Sources: CADE & IBS.
3-38. Brazilian Market Share, Common Steel Flat Products
(1994–1998)
determination of CADE and the extensive cross-ownership between producers in Brazil, indications are
strong that these companies operate in an anticompetitive environment and do not compete aggressively for
market share in their home market.
A Cross-Ownership Web
Extensive cross-ownership in the Brazilian steel industry—another legacy of recent government
ownership—has further insulated the industry from meaningful competitive pressures. 16 A 1998 American
Metal Market article analyzing the state of the Brazilian steel industry described it as “enduring the
growing pains associated with the transition from public ownership to private ownership.” 17
In 1990, the Brazilian government, as part of its National Privatization Program, determined that the steel
sector would be the first major government-controlled industry to begin privatization. By 1994, all the
voting shares held directly by the Brazilian government in the major steel-producing companies had been
sold through a series of equity auctions, largely to employee investment groups and pension funds,
consortia of private investors (including foreign companies) and other Brazilian steel producers. However,
iron ore producer CVRD, at the time a majority government-owned company, acquired significant common
share ownership in several other steel firms. 18 In 1997, CVRD itself was partially privatized, but 32
percent of CVRD is still owned by BNDES, the government-owned development bank. Considering the
present extent of cross-ownership and CVRD’s continued financial interest in the steel industry, the
transition from public to private ownership still has a long way to go.
Four of the country’s major steel producers, CSN, Usiminas, Cosipa, and CST, all share significant levels
of cross-ownership and interlocking directorships (Chart 3-39 19 ).
100 Global Steel Trade: Structural Problems and Future Solutions
CSN
Usiminas
Cosipa
Domestic Sales
8.5
8.0
7.5
7.0
6.5
Carbon Flat Products
Total Domestic Steel in Metric Tons (millions)