The Brazilian steel industry’s outlook is deteriorating because of increased inventories and a potential decline in domestic prices, HSBC Holdings Plc said in a note to clients today.
“There could be pressure on domestic steel prices as global steel prices have fallen,” Jonathan Brandt, an HSBC analyst in New York, said in the note. “The Brazilian real remains strong and domestic steel prices are already at a 7 percent to 10 percent premium to imported product.”
Flat-steel inventories in Brazil have increased for two consecutive months to the equivalent of a more-than-expected 3.5 months of sales, Brandt said.
HSBC was expecting inventories to return to a “historical level” of between 2.5 months and 2.8 months of sales, he said.
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