Brazil's negative news extends beyond the World Cup loss

摘要

The Brazilian steel market remained subdued in July, with domestic sales falling 10% y/y. As a response, flat steel producers gave discounts for some spot transactions, but refrained from offering a general price rollback. We expect the reduction in Brazilian domestic prices offered by distributors, on top of the producers' discounts, to be temporary. These are likely to be discontinued, as demand grows again. Conditions in the Brazilian manufacturing sector worsened for the fourth consecutive month and the PMI remained in contraction territory, at 49.1 in July, despite moving up from 48.7 in June. Similarly, car sales improved from June levels but still remained 13% lower than a year ago. This is likely to reflect the impact of the various holidays during the World Cup tournament.