Beset by problems at home, Brazilian steel looks out at a hard world
By Stephen Eisenhammer
SAO PAULO Aug 15 (Reuters) - Whichever way Brazil's steel industry looks it sees pain.
At home, the economy is on the brink of recession and demand for the world's most used metal is on the wane. Abroad, Brazilian exports are hampered by a strong currency and global production overcapacity.
What is needed, steel executives say, is widespread reform, including higher infrastructure spending, lower taxes, and a weaker Brazilian real .
But although steel companies talk urgently of a state of crisis, and many analysts and economists agree, little change can be expected soon with a presidential election just two months away.
Last week, Companhia Siderurgica Nacional SA, known as CSN, the country's largest diversified steelmaker, posted a 96 percent drop in quarterly net income. "Only a crazy person would invest in Brazil right now," CSN Chief Executive Benjamin Steinbruch told a conference in Sao Paulo this week.
Strong words for a leader of an industry that remains fiercely nationalistic. The conference began with the national anthem and executives repeatedly stressed their patriotic credentials before sticking the knife in.
The problem for Brazil is that the suffering of its steel industry is both the result of a weakening economy, as demand from the construction and auto sectors drops, and a cause of economic weakness as the high price of steel stops companies investing.