(Adds comments, industry context)
SAO PAULO, Aug 19 (Reuters) - Sales of flat steel products in Brazil will remain sluggish this year, making distributors “pessimistic” about the outlook for prices and profit margins, an industry executive said on Tuesday.
Mills are struggling with smaller orders and distributors fear that weak demand for plates and slabs could lead to more unwanted inventory unless industrial activity improves, said Carlos Loureiro, president of industry group Inda.
The “lousy” performance of car makers and machinery manufacturing is hurting sales and margins for distributors, making the outlook for prices “rather uncertain at this point,” Loureiro said at a news conference in São Paulo.
According to Loureiro, the numbers only confirm the depth of a crisis in the domestic steel industry, which is suffering from cost inflation and a stagnant economy. Unwanted inventory remains too high at current levels, Loureiro said, adding that the “ideal” inventory right now is around 2.5 months of sales.
He did not see room for potential price reductions despite the lack of demand. “It would be useless - you can cut prices for a number of products but I don’t see demand reacting at all,” he added. (Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn and Chris Reese)