April 25, 2019 / 10:44 PM / 3 months ago

Brazil steel sector cuts output projections as economy, Vale weigh

SAO PAULO, April 25 (Reuters) - A leading Brazilian steel institute cut its production forecast for the metal to a 2.2 percent rise in 2019 from 2.7 percent amid concerns over economic growth and cost increases after miner Vale’s dam burst disaster.

Institute IABr, which represents a sector made up of 30 steel mills, said on Thursday it now expects 2019 production of 36.03 million tonnes.

It also sees steel consumption, which includes domestic sales plus imports, growing 4.6 percent to 22.05 million tonnes, down from its December projection of 6.2 percent growth.

“The steel industry is now operating at 66.6 percent of installed capacity, which shows that the domestic market has not progressed as expected,” IABr Chief Executive Marco Polo de Mello Lopes told reporters in Sao Paulo.

Major steel producers in Brazil include Vale SA and Usiminas.

The new projections come after the industry had a weak first quarter. Production in the period fell 2.8 percent, domestic sales shrank 0.1 percent and consumption fell 1.4 percent compared with the same period in 2018.

Lopes also said that the steel sector has been in dialogue with the federal government and the state of Minas Gerais to accelerate the resumption of Vale’s iron ore operations in the state, which were reduced after the deaths of more than 200 people caused by a tailings dam burst.

Lopes said that the steel sector is expected to invest $9 billion in Brazil over the next five years. He did not detail the volume of funds contributed in the previous five-year period, but said that the sector’s capital expenditures between 2008 and 2018 totaled $26.8 billion. (Reporting by Alberto Alerigi Jr; Editing by Lisa Shumaker)

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