UPDATE: Brazil Steel Inventory To Normalize In 2nd Half--ArcelorMittal
11 Maggio 2011 - 11:30PM
Dow Jones News
Brazil's large flat-steel inventory levels are expected to reach
more normal levels only by the middle of the second half of 2011,
the chief financial officer of ArcelorMittal (MT), the world's
largest steelmaker, said Wednesday.
"We experienced an inventory bubble in the second half of 2010,"
CFO Aditya Mittal told analysts in a conference call. "We expected
that the levels of imports would decline and that we would
therefore move faster in terms of eliminating this inventory
bubble."
But Brazil's currency, the real, has appreciated against the
dollar while both domestic shipments and imports were higher than
expected in the first quarter, meaning steel inventory remains
high.
He said it may take until the "middle of the second half when it
would come to more normalized levels."
According to Brazilian Steel Distributors' Institute INDA,
Brazil's flat-steel inventories started to rise again in March to
the equivalent of 3.1 months' usage, reaching 1.19 million metric
tons, after having dropped to 2.9 months' usage in February.
Stockpiles had fallen from the record level of 4.1 months' usage
last October, after Brazilian steelmakers reduced product prices to
compete with imports, but still hadn't returned to what INDA
considers "normal" levels, equivalent to 2.5 months' usage, an
institute spokeswoman said.
According to Barclays Capital, INDA expects inventories to have
risen to the equivalent of 3.7 months' usage in April, the figures
for which will be announced only late May. Stockpiles are on the
rise again because consumers brought forward aggressive purchases
in advance of mills' plans to hike prices in April, temporarily
boosting inventories which may now take some five months to settle
down to traditional levels again, the Barclays analysts said.
Brazilian mills are meanwhile reported to be facing resistance
to their proposed price increases of up to 10%, due to the recent
softening of global steel prices, even despite a halving of import
levels from first-quarter 2010 levels.
There has been a quick and significant change in the inventories
scenario in recent weeks, according to Barclays. "The de-stocking
phase in the domestic steel industry was playing out in-line with
expectations during the beginning of 2011. Nevertheless...the
scenario has now changed and there is a significant inventory
overhang in the domestic market. We are now back to an unfavorable
inventory cycle."
-By Alex MacDonald and Diana Kinch, Dow Jones Newswires;
44-7776-200-924; alex.macdonald@dowjones.com
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