By Brazil Stock Guide – Brazil’s steel industry is facing one of its most challenging periods in decades, as a surge in imported steel—particularly from China—combines with weak domestic demand, geopolitical uncertainties, and U.S. tariffs, reported Valor Econômico.
These factors are putting pressure on local producers, delaying investments, and threatening the long-term viability of the sector. Companies such as Gerdau (GGB) and Usiminas (USIM5) have already announced cuts in their expenditures, while ArcelorMittal (MT) acknowledges that some of its ongoing projects may face delays.
At the heart of the issue is the massive influx of imported steel, with Oliveira, president of ArcelorMittal Brasil, warning that the situation mirrors trends seen in Europe. “In the 20 years prior to COVID, import penetration was 10%, with a volume of 2.2 million tons. This year, it’s 6.3 million tons. That’s a 200% increase. From China, it’s 330%,” said Jorge Oliveira during a recent industry event.
The Brazilian government has taken some steps to address the issue, including implementing a tariff-quota system and initiating an antidumping investigation into 25 steel products from China. However, Oliveira argued that these measures have yet to yield the desired results and warned that further investments would depend on more effective trade defense actions. “We have the appetite to continue investing in Brazil, but the risk for this future is the import situation,” Oliveira stated.
At Gerdau, André Gerdau Johannpeter, chairman of the board, referred to 2025 as “the most turbulent year” in the history of the steel industry. The share of imported steel in the domestic market has jumped from 10% to around 22%–25% in recent years, exacerbating the pressure on local manufacturers. Gerdau’s operations are running with 35% idle capacity, nearly double what is considered healthy. “We are reaching the limit. Reducing activity further will make the business unviable. The quota-tariff system helped, but it didn’t solve the problem,” Johannpeter added.
Other sectors reliant on steel, such as construction and automotive manufacturing, are also feeling the strain. Eduardo Fischer, CEO of MRV Engenharia, acknowledged that while higher import tariffs increase input costs for the construction industry, maintaining a robust national steel industry is crucial for the broader economy. “At the end of the day, when the product becomes more expensive in the market overall, it’s worse for the construction industry. But our sector is long-term, and we also need a strong national steel industry,” Fischer emphasized.
The automotive sector is also grappling with the rising share of Chinese imports, which now threaten to reshape the market. The National Association of Motor Vehicle Manufacturers (Anfavea) is concerned about the impact of U.S. tariffs on Brazilian steel and aluminum, which could disrupt local supply chains. Antônio Sérgio Martins Mello, vice president of Anfavea and executive at Stellantis, stressed the importance of stability in supply chains, though he avoided direct confrontation with government policies.
The situation is further complicated by the 50% tariffs imposed by U.S. President Donald Trump on Brazilian steel and aluminum, which could result in even more subsidized foreign steel entering Brazil’s domestic market. Christopher Garman, director at Eurasia Group, noted that U.S. protectionism is deeply rooted in political, economic, and geopolitical factors. However, he predicted that the U.S. could ease some of these barriers in the coming months, though no immediate signs of change have been seen for Brazil.
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