Steelmakers must raise prices to car assemblers

Brazilian steelmakers will probably implement an increase in prices of flat steel sold to auto makers of vehicles that can reach 5 percent by the end of the year, Goldman Sachs analysts wrote in a report to clients on Wednesday (28).
According to analyst Marcelo Aguiar and his team, the increase in prices in Brazil announced between March and April, which ranged from 6% to 8% depending on the product, and the increment of 5% to 6% in August have not yet been fully passed on to automakers.
The vehicle manufacturers retain long-term contracts with steelmakers and the price is typically negotiated annually or every six months, depending on market conditions.
— Our checks indicate that the current steel price paid by automakers is 10 percent below the paid by other customers of the steel industry.
For analysts, ' this is unusual '.
In Brasilia, the Director of institutional relations of General Motors and also President of the Association of automobile manufacturers, Anfavea, Luiz Moan, said that readjustments have yet to arrive for the sector.
— We hear in the press, in fact, that desire of steel mills (to increase prices). But, so far, from the point of view of automakers, such readjustment has not yet arrived.
Moan spoke during the hearing in the Committee on Science and technology of the camera.
— If eventually arrived at a carmaker, is in the process of negotiation.
A recent decline in the real against the dollar could trigger a clause that accelerates the resumption of price negotiations, said Goldman analysts.
The company benefited by more adjustments, according to the analysts, is Usiminas, largest supplier of steel to the automotive industry in the country, which has 35% of the sales revenue for automakers. CSN also would benefit from higher prices to vehicle manufacturers, said Aguiar in the document.
Steelmakers have announced price adjustments of flat and long steel in early August to distributors in the country, after the intensification of the devaluation of the real against the dollar.
At 11:18, shares of Usiminas climbed 1.68 percent while the Ibovespa operated at high of 0.36%. CSN, meanwhile, advanced 0.58 percent.