Brazil’s Steel Industry Faces Crisis as Imports Surge and Capacity Drops

Rising Steel Imports Threaten Brazil’s Domestic Industry

Brazil’s steel industry is at a critical crossroads, with executives warning of a deepening crisis caused by rising imports and collapsing domestic demand. According to André Gerdau Johannpeter, co-vice president of steel giant Gerdau, imported steel now makes up 22–25% of Brazil’s domestic market—more than double its historical average. The majority of these imports originate from China, creating intense pressure on local producers.

Currently, Brazilian steel mills are running at only 35% capacity, with over a third of production equipment either idle or operating well below potential. This underutilization reflects a troubling decline in domestic orders, making it difficult for the industry to maintain profitability. As a result, many fear that Brazil could lose key elements of its steel production base, jeopardizing downstream industries that rely on stable local supply.

Meanwhile, geopolitical tensions and global market shifts continue to complicate trade flows. With tariffs and protectionist measures rising globally, Brazil’s reliance on imported steel further exposes the market to volatility and supply chain disruptions. Gerdau’s leadership emphasized that without immediate policy and market interventions, the structural damage could become long-lasting.

Brazil Reinstates Tariffs to Curb Steel Imports

To address the surge in foreign steel, Brazil’s government has reinstated a 25% tariff on 23 types of metal products, up from 19 in 2024. This policy, set to last 12 months, aims to curb dumping and support domestic producers facing mounting competitive pressure. The expansion of the tariff list reflects the dramatic increase in imported steel volumes over the past year.

The government also maintained a quota system that allows limited steel imports at reduced NCM tariff rates of 9% to 16%. However, these quotas exclude trade agreement partners and special regimes, limiting the policy’s reach. While the protective measures provide short-term relief, industry leaders argue that Brazil needs a more comprehensive strategy to revive its steel sector and protect jobs.

China’s role remains central to the current situation. As one of the world’s largest steel exporters, China’s oversupply continues to flood foreign markets, including Brazil. Without stronger trade defenses or a domestic demand rebound, Brazil’s steelmakers may struggle to compete and invest in future capacity.

SuperMetalPrice Commentary:

Brazil’s steel sector illustrates a broader challenge in global metals markets: balancing open trade with the need to preserve industrial capacity. The combination of surging Chinese imports, geopolitical instability, and domestic underutilization creates a perfect storm for local producers. While Brazil’s renewed tariffs may slow the bleeding, they remain a short-term fix. A long-term strategy—focused on infrastructure investment, competitive energy prices, and sustainable production—will be essential to restore the health of Brazil’s steel industry and shield it from future shocks.