ArcelorMittal Brasil had a profit more than 10 times higher in 2021, driven by demand for steel in the country, in addition to high alloy prices in the international market and favorable exchange rate, but expects to slow down this year amid an expected accommodation in domestic consumption .
The unit, which last year represented 22% of the operating results of the global steel group ArcelorMittal, had a net income of R$12.8 billion in 2021. Cash generation measured by earnings before interest, taxes, depreciation and amortization (Ebitda ) totaled BRL 20.2 billion, almost four times higher than in 2020. The margin rose from 15% to 29%.
As a comparison, Gerdau, which operates in the same long and flat steel segments as ArcelorMittal Brasil, had a net profit of R$15.6 billion last year, a 552% jump over 2020, when the domestic industry suffered for months the impact of social isolation measures.
“This year, the domestic market will certainly settle down,” said Jefferson De Paula, president of ArcelorMittal Brasil and president of ArcelorMittal Aços Longos for Latin America, avoiding making projections due to the proximity of the parent company’s first quarter results release, scheduled for May 5th.
“It is difficult to get a forecast number right in the face of factors such as the election, war in Ukraine and China. But we consider it a neutral market, maybe a little negative,” he said.
In 2021, according to data from Aço Brasil, apparent consumption, the sum of sales of steel produced in the country plus imports, rose 23.5%, to 26.5 million tons. For this year, the entity maintained this week a high perspective of 1.5%.
Despite this, De Paula stated that ArcelorMittal Brasil is optimistic about the medium-term prospects of the Brazilian market, with growth in demand for steel driven by segments that include agriculture and civil construction.
The company plans to invest R$ 7.6 billion for the next three years in the country, focused on serving the domestic market and improving the quality of the product mix, which includes steel for the automotive sector. The investment plan is the largest being developed in the sector in the country, according to the company.
The annual average investment forecast by ArcelorMittal Brasil, of around BRL 2.5 billion, is slightly higher than the BRL 2.1 billion invested by the company in Brazil in 2021.
“The idea is to accelerate so that we can produce higher quality steel,” said De Paula. The plans include the installation of new equipment that will increase the capacity of the special steel plant in São Francisco do Sul (SC) by 37.5%, to 2.2 million tons per year, and the doubling of the plant’s capacity in Monlevade (MG), also to 2.2 million tons per year.
The company restarted the third rolling mill at the Monlevade mill in January and the equipment, which had been idle since assembly in 2015, reached 100% of its daily production capacity this week, said De Paula.
According to the executive, the reduction of the Tax on Industrialized Products (IPI) to 35% by the federal government should increase demand for steel in Brazil in the coming months, “generating effects already this year”, but he avoided making projections.
The group has a large integrated steel mill in Ukraine, which has been idle since the beginning of March, after the Russian invasion of the country. But De Paula said that the focus of investment in Brazil remains on the domestic market, when asked about the possibility of the Brazilian unit being able to supply part of the paralyzed production of the Ukrainian plant.
About Argentina, where the company produces about 1 million tons of steel per year, De Paula said that the situation is difficult in the face of inflation that exceeds 50% per year. Despite this, the executive stated that the country should register new growth in steel consumption in 2022, after a high in 2021, driven by demand from the civil construction sector.
Source: CNN Brasil
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