Brazil Metals Report Q2 2014

Date: March 26, 2014
Pages: 58
US$ 1,295.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF), Download
ID: B8678A4A58AEN

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Includes 3 FREE quarterly updates

BMI View: We expect solid metals consumption growth in Brazil through 2018 on the back of the automotive, construction and infrastructure sectors, among others. Despite delays in infrastructure spending under the Growth Acceleration Programme, we see an uptick in construction activity in H214 and 2015, which should drive both production and consumption higher. Furthermore, we forecast gross fixed capital formation (GFCF) to accelerate from 2015 through 2018. Additionally, we forecast support for the metals sector due to our forecast for average annual real GDP growth of 3.0% from 2014 to 2018, with growth accelerating over the period.

Upside In 2015 Onward

We remain constructive towards the Brazilian metals sector over the medium term, though note we expect 2014 to see muted production and consumption growth. After disappointing economic data in 2013, a year in which overall economic growth and fixed asset investment slowed, we see activity picking up towards year-end 2014 and into 2015. For full-year 2014 though, we recently downgraded our forecast for real GDP growth from 2.5% to 2.0% and our forecast for gross fixed capital formation (GFCF) from 5.0% to 4.5%. Furthermore, infrastructure projects still face various delays, which presents a downside risk to our metals consumption and production forecasts this year. Yet from 2015 through 2018, we see a broader recovery, with GFCF averaging growth of 4.9% per year and real GDP growth averaging 3.3% per year. These growth forecasts are underpinned by our expectation for strong growth in metals-consuming sectors, including auto production, construction, and infrastructure.
BMI Industry View
Upside In 2015 Onward
Metals SWOT
Industry Forecast
Steel: Consumption And Production To Grow At Moderate Pace
Consumption To Remain Subdued in 2014
Production Recovery By Mid-Decade
  Table: Brazil - Crude Steel Production, Consumption, Growth and Balance ('000 tonnes)
  Table: Brazil - Steel Industry Historical Data, 2003-2012 ('000 tonnes, unless stated otherwise)
Aluminium: Cheaper Electricity To Spur Production
Electricity Prices Pose Challenge To Production Growth
Consumption To Fare Better
  Table: Brazil - Aluminium Consumption And Production, ('000 tonnes)
Copper: Consumption Growth To Outpace Production
Production Growth To Lag Consumption
  Table: Brazil - Copper Consumption And Production ('000 tonnes)
Regulatory Development
Tax Regime
Corruption Remains Vexing
  Table: Brazil - Political Overview
Commodities Forecast
Commodity Strategy
Steel: Subdued Medium Term Outlook
Aluminium: Despite Recent Upswing, Underperformance To Persist
Copper: No Time To Celebrate Yet
Lead: Outperformance On The Cards
Nickel: Sideways Movement In Weeks Ahead
Zinc: Positive Momentum To Continue
  Table: Select Commodities - Performance & BMI Forecasts
  Table: BMI Commodities Strategy
Steel Price Forecast
  Table: BMI Steel Forecast
Short-Term Outlook
Core View
Global Steel Glut To Persist
Production: Rationalisation In The Long Term
Consumption: Growth Decelerating
Excessive Chinese Exports
Growing Arbitrage Between East & West
Risks To Price Outlook
  Table: Steel Data & Forecasts
  Table: Global Steel Prices By Region & Product, US$/tonne (ave)
Competitive Landscape
  Table: Financial Data For Key Metals Firms Listed In Brazil, FY2013
Domestic Costs Weigh On Energy-Intensive Industry
Company Profile
Recent Financial Performance
  Table: Gerdau - Key Financial Data
Cia Siderúrgica Nacional
Recent Financial Performance
  Table: CSN - Key Financial Data
Company Overview
Company Strategy
Recent Financial Performance
  Table: Vale - Key Financial Data
Company Details
Cross Checks
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