b'BRAZIL STEPS INTO VACUUM LEFT BY REDUCED STEEL EXPORTS FROM RUSSIA AND UKRAINEBy Peter Buxbaum, AJOTMarch 2023 | Published in AJOT Issue #751I ncreaseddomesticconstructionandinfrastructurehighlighted by another recent development. In January spending, and a positive economic outlook for 2023,2023, Brazilian antitrust authorities approved the acqui-could mean increased steel consumption at home. sition of the Brazilian steelmaker Companhia Siderrgica ThewarinUkraine,andthesanctionsimposedbydo Pecm (CSP) by ArcelorMittal, a multinational steel western nations on the Russian steel industry, has com- producer headquartered in Luxembourg, for $2.2 billion. promised global steel supplies. Among other measures,Thereareseveralrationalesbehindtheacquisition, theUnitedStatesimposedsanctionsagainsttwoofincluding a Ukraine war connection. Russiaslargeststeelproducers,SeverstalandMMK.Lastyear,notedAdityaMittal,ArcelorMittalsCEO, The United Kingdom implemented a total ban on iron andwas overshadowed by the outbreak of war in Ukraine, steel products from Russia and the European Union (EU)where we have steel and mining operations. The conflict banned supplies of several Russian rolled steel and pipeis impacting growth. products. And the production and exporting of steel fromCSP, Mittal added, is one of Brazils lowest-cost slab Ukraine has been disrupted as a result of the hostilities. producers,akeyRussiansteelexport,andoverthe New Steel SourcingThe Rise of Brazil longer-term there is the option to significantly increase its slab capacity. In other words, the CSP acquisition Thisstateofaffairshasledsteel-consumingcom- provides ArcelorMittal with the opportunity to mitigate panies, especially in Europe, to look for other sourceslosses in Ukraine and capitalize on shrinking Russian of supply. Judging by the growth in its export volumes,steel slab sales.Brazil has entered this vacuum to make up some of theAnother factor to consider is that the CSP acquisition shortfall. enhances [ArcelorMittals] position in Brazil, said Mittal, According to Worldsteel, Russia produced 7.2% lessproviding the company with the opportunity to satisfy steel in 2022 than in 2021. Russias Ministry of Industrylocal demand, which is set to skyrocket. While global and Trade reported that sanctions affected the exporteconomies, including Brazils, face economic uncertainty, of 4.8 million tons of finished steel, semi-finished steel,Brazils economic prospects appear to be relatively rosy, and steel pipe. In January 2023, Worldsteel reported thatwhich, along with expected spending increases in Brazils production in Russia and Ukraine was down 24.9% forinfrastructure and housing sectors, will likely increase the month, while Brazils was up 12%. domestic demand for steel. That raises the question to The war-related supply restrictions prompted Brazil,what extent Brazil can supply export markets to make up theworldseighth-largeststeelproducer,toincreasefor contracting Russian and Ukrainian steel production exports to Europe, which grew by no less than 710%going forward.in the first half of last year, according to data from theEuroperepresented13.4%oftotalshareofBrazils national steel association Ao Brasil. The U.S. remainsexports in 2022, as compared to 2.2% in 2021, according Brazilslargestexportmarketforsteel,and,althoughto a report from S&P Global. The U.S. remained the main volumes dropped in 2022, that trend may be due for adestination of Brazilian steel products, but this figure reversal, if January 2023s numbers are any indication. was down 9.4%, the report noted.Brazils growing importance in global steel markets is 6'