ProducIng steel for the World

Transcription

1 Producing Steel for the World 37

2 Brazil s steelmaking industry is ranked as one of the world s most competitive, in terms of modern advances and volume of output. Brazil is the world s ninth largest steel producer, accounting for 50.2% of Latin America s production and 2.9% of the world total. Technological innovation, product development, processes and managerial methods are all factors contributing to the country s highly competitive steel producing capacity. Brazil s first steel mills were built in the 1930s, when large proven reserves of high-quality iron ore were known to exist. The first integrated mill was erected with foreign and national financing, and set an example that has persisted throughout the development of Brazil s steelmaking industry. Expansion of national steelmaking capacity reached its peak during the 1970s and 80s. Up until the mid-1970s, Brazil relied heavily on imported steel. This was a time of accelerated industrial expansion, primarily under government control, intended not only to meet growing demand but also to lessen reliance on imports. Beginning in 1981, Brazil became a net exporter of steel. Production based on partially government-owned companies became less and less attractive as the government itself controlling 70% of the nation s manufacturing capacity suffered erosion of its abil- 39

3 ity to invest during a period of intense technological development in steelmaking worldwide. The alternative to avoid compromising plant productivity and competitiveness was to transfer that capacity to private industry. Open-auction privatization began in the late 1980s and was concluded in 1993, with a national installed capacity of 28,000,000 metric tons. Following that privatization, from 1994 through 2004, the industry invested $13 billion mostly for technological upgrades, eliminating production bottlenecks, improving the mix of products offered and providing environmental protection. Brazil s installed steelmaking capacity, among the most advanced in the world today, comprises 25 mills, 11 of which are integrated (beginning with iron ore mining), and another 14 are mini-mills (recycling ferrous scrap feedstock), administered by seven corporate groups. Integrated mills currently account for 74% of all Brazilian steel production, with mini-mills producing the remaining 26%. Total Brazilian installed capacity amounts to 36,000,000 metric tons of crude steel per year, 94% of which is produced by strip casting. Brazil is the ninth largest producer in the world, accounting for 50.2% of Latin America s production and 2.9% of global steel production in Brazilian Steel Production In thousands of tonnes Crude Steel 26,717 29,604 31,147 32,909 31,631 Steel products* 25,790 27,873 29,119 30,555 29,202 *Rolled and merchant semifinished shapes. 40

4 Investments in technology: Operation room of Cosipa, Cubatão, Minas Gerais. Central to Brazil s steelmaking industry development has been the purposeful tracking of market trends and the requirements of steel-consuming sectors. This made it possible to meet 95% of domestic demand on competitive terms, as can be seen not only in direct exports, but also exports of such steel-intensive industries as automaking, heavy appliances and capital goods. 41

5 Sectorial Distribution by Apparent Consumption Steel consumption patterns in Brazil are not very different from those in more industrialized economies. Although per capita steel consumption is low (91 kg per person), Brazil has a well-developed industrial infrastructure in such industries as automaking, auto parts, durable consumer goods in general, and capital goods. Brazil s steelmaking industry fully supplies domestic demand and has been a strong exporter since the 1990s, with over 40% of its production placed on the export market. Brazilian exports are heavily weighted toward semifinished shapes (slabs and billets). Products such as these, intended for processing in mills abroad, have in recent years accounted, on average, for over half of the industry s total exports. 42

6 Siderurgy process: ingot smelting of Gerdau Açominas, in Ouro Branco, Minas Gerais. Steel Product Exports 43

7 Steel products from Brazil are exported to over a hundred countries, making the industry one of the nation s most important in terms of the balance of trade. Exports in 2005 totaled 12.5 million metric tons of steel worth $6.5 billion. Steel Export Target Markets Brazil s steel industry is ranked among the most competitive in the world. Besides its modern mills, Brazil has high-grade iron ore deposits and is currently the world s leading producer and exporter of that raw material. Also figuring into Brazil s competitiveness are good, low-cost logistics due to the advantageous mine-mill-port-market arrangement geographically inherent in the country s installed capacity. The industry is also at the forefront in terms of awareness of environmental issues, and nearly all Brazilian steel mills have achieved ISO certification. 44

8 45 Quality of Siderurgy products: steel bobbin supply of Cosipa, in Cubatão, São Paulo.

9 Continuing trends favoring increased internationalization and concentration in steelmaking have led to processes involving similar changes in Brazil. The result has been greater competition in the industry, requiring permanent investment in competitive upgrades through application of current technology, product and process development, managerial methods and economies of scale. No small consideration should be given to the fact that Brazil s steelmaking industry is comprised primarily of publicly-traded corporations which place great emphasis on corporate responsibility. Brazilian companies are therefore increasingly preoccupied not only with quality production and its attendant profits, but also with social and environmental issues, and in standards reconcilable with consumer demands and the larger requirements of society in general. Related issues, such as the country s economic growth and current low per-capita consumption figures point to a likely increase in demand for steel in coming years. Brazilian Steel Institute (IBS) market projections call for annual growth rates of better than 8% over the next five years. Given those prospects, the companies comprising Brazil s current steelmaking capacity are calling for investments on the order of $11.2 billion from 2006 through 2010 primarily to increase their capacity from 36 million to approximately 44 million tons per year. 46

10 In addition to the previously mentioned investments, there are projections calling for increased capacity, with the construction of new greenfield plants intended to strengthen exports of merchant semis. This, as we ve seen, is the Brazilian steelmaking industry s traditional approach. These investments, planned by international companies in partnership with Brazilian companies, hope to benefit from comparative advantages Brazil has to offer. Luiz André Rico Vicente President of the Brazilian Steel Institute (IBS) 47