Global Steel Trade; Structural Problems and Future Solutions

9.2%
22.5%
1997 1998 1999
Asia Europe United States
Latin America Other
Source: World Trade Atlas.
3.5%
17.7%
27.8%
32.6%
7.9%
8.2%
5.2%
19.7%
16.8% 25.5%
25.9% 16.4% 15.5%
37.0%
29.9%
3-41. Brazil—Distribution of Total Exports (1997–1999)
32.6%
42.2%
4.0%
2.7%
30.8%
11.5%
41.7%
13.2%
6.3%
4.6%
31.6%
1997 1998 1999
Asia Europe United States
15.3%
42.2%
While overall U.S. steel
imports from Brazil declined
from 1997 to 1998 (mainly
due to a decline in
semifinished steel imports),
imports for some product
categories increased. Hotrolled
steel exports to the
United States increased by
67,000 MT, or roughly 17
percent in 1998. 41 From 1997
to 1998, the percentage of
Brazil’s hot-rolled exports
shipped to the United States
grew from roughly 33 percent
to more than 41 percent.
Meanwhile, exports of coldrolled
steel to the United
States nearly doubled
between 1997 and 1998,
climbing from 122,000 MT to
225,000 MT, representing an
increase in the percentage of
Brazil’s total cold-rolled
exports going to the United
States from 45 percent in
1997 to 59 percent in 1998 42
(Chart 3-43). 43
Efforts to Maintain
Export Levels to the
United States
Latin America
Source: World Trade Atlas.
Other
With the collapse of demand in
its most important export
market and the sudden decline
of demand at home, Brazilian
3-42: Brazil—Distribution of Hot-Rolled Steel Exports (1997–1999) steel producers cut their U.S.
dollar export prices for certain products to retain export levels and maintain production and capacity levels.
In 1998, almost 26 million MT of crude steel were produced, a decline of just 1.5 percent from the
previous year. 44 Sales in the United States remained profitable because companies were able to cut prices
in line with the depreciation of the Brazilian real. Despite rapidly dropping U.S. prices, especially in the
second half of 1998, the consistent depreciation of the real during 1998 kept pace with the U.S. dollar
price declines and allowed Brazilian producers to generally maintain their revenues in real terms on U.S.
sales. In 1998, Brazil’s largest steel producers were profitable, 45 although their net profits did decrease
from 1997 levels.
Between December 1997 and December 1998, the average unit value of imports of carbon hot-rolled
steel 46 from Brazil dropped from $324 per MT 47 to $263 per MT (Chart 3-44). Similarly, during the
same period, the price of imported carbon cold-rolled steel from Brazil dropped from $441 per MT to
$323 per MT. 48 Imports of carbon semifinished steel experienced a similar pricing decline. Because
104 Global Steel Trade: Structural Problems and Future Solutions