Attempts by Brazilian steelmakers to increase domestic spot prices of 10 mm rebar in the beginning of July not only failed but also leaded to discounts to distributors and construction companies, stimulating a pricing war among local producers.
On Friday, Platts assessed its weekly rebar domestic Brazil price at Real 1,650/mt ($501.82/mt), ex-works, taxes excluded, based on a range of Real 1,600-1,700/mt, down 1.5% -- or Real 25/mt -- from previous week.
"[Companies' price hikes] seemed like science-fiction," said a commercial representative of a steelmaking group, adding that mills are highly indebted.
Recently newcomers in the Brazilian domestic long steel market, such as CSN and Mexican group Simec, forced a fierce dispute for market share, he said.
"Competitors are in a tug-of-war, disputing prices and customers," the source said. "The increase announced in July was not absorbed."
If absorbed, it would be the second wave of adjustments, since companies managed to increase prices by 4%-6% in between May and June.
"However, after this increase I was forced to reduce my price by about 5%," said another producer source.
According to a third producer source, "the cost of inputs is not the same as it was back in 2006, but our product price [rebar] went back to the same of eight-10 years ago," he explained. "Prices are at an unsustainable levels."
