Start Usiminas shows a drop in sales and announces a reduction in exports to focus on the domestic market in steel production

Usiminas shows a drop in sales and announces a reduction in exports to focus on the domestic market in steel production

April 29, 2022 5:11 pm to 5:11 pm
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Steel sales had a sharp drop due to international conflicts and, now, Usiminas has announced a production plan focused on sales to the domestic market throughout this quarter, as a way to recover from the problem.
Photo: Usiminas/Disclosure

Steel sales had a sharp drop due to international conflicts and, now, Usiminas has announced a production plan focused on sales to the domestic market throughout this quarter, as a way to recover from the problem.

After a somewhat lower-than-expected first quarter for steel sales, Usiminas recently announced that it will focus its production throughout this next quarter on the domestic market. Until this Friday, (29/04), the company intends to reduce the volume of exports to other countries and believes that this may be the best way to reverse the situation of current sales.

Fall in steel sales at Usiminas makes the company change focus from alloy production to invest in the domestic market with a reduction in export volume 

The international conflicts that took place during the first quarter of 2022, mainly in relation to the war between Ukraine and Russia, ended up affecting the international market at several points, including steel exports. Thus, the Usiminas company currently does not see a market as focused on the acquisition of the alloy and intends to change its current strategy to focus on the national territory for product sales. 

The company announced that it obtained a reduction in the volume of steel sales to other countries and that, throughout this second quarter, it should continue with the fall, but the focus on the domestic market could reverse the situation over the next few months. Thus, the company announced the sales forecast of 950 thousand to 1.05 million tons of steel in the second trimester, a drop of around 16% over the first three months of the year, which had already seen a sharp drop compared to the last quarter of 2021.

Thus, the steelmaker's commercial vice president, Miguel Home, commented on the moment and stated that “The volatility of the slab market will make us reduce exports (in the second quarter). The reduction in 'guidance' is focused on reducing our exports. So far, there has been nothing on the horizon that calls into question the viability of this business model. The world still has very large steel overcapacity. This does not make the account close, so we are waiting for the recovery of production from the coke plants. We do not have a clear forecast at this time.”

The company's steel exports will be reduced in volume and production in the company's blast furnaces will be changed to focus on domestic sales

After the not positive projections for the company this quarter and the results of the last period, Usiminas is now changing its sales strategy and will reduce the flow of exports, since there is no demand for steel in the international market. In addition, its production will also undergo changes and the company must keep blast furnace 2 at the plant in Ipatinga (Vale do Aço) at least until June, due to delays in the works of the structure. 

As a result, Usiminas will continue operating with blast furnaces 1 and 3 in Ipatinga, and blast furnace 3, the company's largest, is expected to shut down for 110 days as of April next year. This is a strategy aimed at resuming usual production in the long term, as a way of ensuring greater stability in the steel market so that the company can resume exports in a more controlled and financially secure manner.

Thus, focusing on the domestic market for supplying the civil construction, mining and steelmaking sectors is the best alternative for Usiminas to control the drop in sales and remain resilient in the midst of the conflicting moment in the international market.

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