Fitch: Brazilian steelmakers well-positioned

Fitch Ratings said that Brazilian steel producers could maintain high profit margins compared with peers in 2008 against a backdrop of rising iron ore prices.

Brazilian steel producers include Companhia Siderurgica Nacional, Usiminas, Gerdau SA and ArcelorMittal Brasil.

The agency said Brazilian steel companies enjoy important competitive advantages, including modern production facilities, proximity to sources of iron ore and a highly concentrated domestic market.

The industry also benefits from barriers to entry, as Brazilian steel producers own or have privileged access to large steel distributors, Fitch added.

"The strategic sourcing of raw material inputs serves as a competitive advantage for steelmakers in the current environment of unusually high commodity prices, and Brazilian steel producers are particularly well-positioned in this regard," Anita Saha, a Fitch Director, said in a written statement.

If global prices slide and trade becomes more difficult, Brazilian companies could be challenged to match 2007 profit margins as about one-third of the country's total steel sales volume comes from exports, Fitch noted.

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