Brazilian crude steel production fell by 17.9% in the first half of 2020 compared to the same period in 2019, while domestic sales fell by 10.5% from January to June, the same percentage of decrease in apparent consumption (- 10.5%). Exports decreased 8.1% and imports, 17.0%. The sector's negative performance in the first half was due to the impacts caused by the COVID-19 pandemic in Brazil and worldwide.

However, the numbers for June compared to May were already better, reflecting the beginning of the recovery path. Domestic steel sales in June increased by 29.6% compared to the previous month, while apparent consumption rose by 29.4% and exports increased by 14.5%. Steel production in June, however, fell 5.0% compared to the immediately previous month. Of the total of 32 blast furnaces in Brazil, 10 remain paralyzed.

The Steel Industry Confidence Index (ICIA) in July surpassed 50 points, a dividing line between confidence and lack of confidence. The return of confidence in the sector in July was mainly due to signs of recovery in the 2nd semester. ICIA grew 15.9 points in comparison with the previous month and reached 62.8 points. With this result, ICIA approaches the pre-pandemic level of COVID-19 (70.2 points in February).

Currently operating with only 48.5% of its installed capacity, the sector expects the resumption of the domestic market to occur gradually. Instituto Aço Brasil considers that export is the short-term alternative to reduce idleness of companies in the sector. The greatest increase in exports, however, depends on the reintegration of Reintegra, a mechanism by which companies are reimbursed for taxes that are present on exports, which undermine the competitiveness of Brazilian products. The reestablishment of the Reintegra rate at the 3% level will enable the manufacturing industry to recover production levels prior to the start of the pandemic and to increase the supply of skilled jobs in the country. It is a transitional measure until the end of cumulative taxes, as advocated in the tax reform, now under discussion in the National Congress.

In the domestic market, the sector's expectation is that infrastructure projects and civil construction are the main drivers of consumption of steel products, with a slower recovery in other consumer segments, such as the automotive sector.

In the world panorama, the serious shock in the economies of the countries, caused by the pandemic, made its government to adopt even more restrictive measures of commercial defense to protect their industry and jobs. COVID 19 also exposed the great dependence that most countries have on inputs and products manufactured, mainly, in China. This situation of vulnerability generates reflection on the need to strengthen national production chains, to reduce dependence on other countries, valuing research and technological innovation and prioritizing the generation of jobs in the country.

The consolidated data from January to June 2020 for the steel sector in Brazil are published at: https://institutoacobrasil.net.br/site/estatistica-de-desempenho/

The July / 2020 Steel Industry Confidence Index (ICIA) is available at:https://institutoacobrasil.net.br/site/indice-de-confianca-da-industria-do-aco/