Brazil cuts taxes on some imported steel plates

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31 Jul 2010

Brazil's government cut taxes on some imported steel products, citing a temporary shortage in supplies that could jeopardize production for capital goods producers and petrochemical companies.
The government slashed the tax on carbon-made and rolled plates to 2 percent from 12 percent previously for the next six months, said the Foreign Trade Council, a chapter of the Trade and Industry Ministry, in a statement.
The council, known as Camex, said that domestic production of both products currently fails to meet basic standards. Demand for the plates, which are a key raw material for some capital goods used by petrochemical companies, has soared in recent months.
"The requirement for certain standards of manufacturing of the above mentioned plates encompasses material resistance and their very specific chemical composition," Camex said in the statement.
The move could pit the government against the largest steelmakers in Latin America's largest economy. The government repeatedly threatened to slash taxes on some imported products this year to keep domestic steel prices from rising.
Local steelmakers began to raise prices of flat and long steel this quarter after the cost of iron ore, the main ingredient for steel, doubled since April.
Last year, the government reinstated import taxes in June, bowing to pressure from local steelmakers that had been hurt by the global economic recession of 2008-2009. At that time, Camex withdrew long steel, plates, hot- and cold-rolled steel as well as rods from the list of exempted products.
Gerdau is Brazil's largest maker of steel products for the construction industry and has a unit of specialty steel. CSN is the largest diversified steelmaking group in Brazil and, alongside Usiminas, produce flat steel, including cold and hot-rolled plates and other products for the automobile industry.

Source: Reuters