Sao Paulo (Platts)--26Feb2013/610 pm EST/2310 GMT
Brazilian steelmaker Usiminas is increasing, for the second time this year, its flats prices to the independent distribution segment by up to 12.7%, market sources said Tuesday. The new prices will be effective March 1. According to distributors, prices for cold-rolled coil will rise by 6.1%; hot-rolled coil by 7.95% and galvanized coil by 12.7%. "The flat steel price increase in March aims to improve the [company's] pressured results," said a report from bank Itau BBA. "We believe that the main motivation behind the announced price increase is to recover the very thin margins in the steel business; e.g., Usiminas reported a 1% EBITDA margin in its steel operation in Q4 12." One distributor in Sao Paulo said: "If they don't increase their prices, they will continuing reporting losses as in the last quarter's results." Other firms (CSN and ArcelorMittal) may follow and announce price increases soon, he said. Brazil's auto parts segment may also face a hike in the steel prices, with Usiminas and CSN planning an increase of around 5.5% for March, sources said. ArcelorMittal might only hike its prices to the same level as its competitors in May, they said. Usiminas did not confirm nor deny its price hike. ArcelorMittal maintained its position of not commenting on its pricing strategy. CSN did not answer a request for comment. Usiminas began applying its price hikes mainly to distributors and some auto parts companies in February and planned to finish implementing the increases to domestic customers by the end of the first quarter. These moves increased prices on HRC by 7% and on both CRC and HDG by 3.5%. Considering the new prices to be effective on March 1, Usiminas' HRC may be negotiated at around $833-$870/mt; CRC at $1,040-$1,051/mt and HDG at around $1,227-$1,266/mt. All prices are ex-works and do not include taxes.--Bruno Martins, bruno_martins@platts.com --Edited by Richard Rubin, richard_rubin@platts.com