Market Value of Brazilian Steel Mills Drops US$ 1.3 Billion After Trump's Announcement

03/09/2018 - 11h37

The confirmation that the United States is going to impose tariffs on steel and aluminum imports resulted in market value losses of R$ 1.8 billion (US$ 0.55 billion) for Brazilian steel mills, on Thursday (8) alone.

Accumulated losses since March 1st, when Donald Trump announced the measure, total R$ 4,3 billion (US$ 1.32 billion).

The session had already started under a shadow of expectations cast by Trump's formal announcement which would be made at the end of the afternoon.

Steel stocks reflected investors' concern and remained bearish during trading session, suffering a sharp drop after Trump's official announcement.

Brazil is the second largest exporter of steel to the United States.

With the confirmation, CSN's shares dropped 5.08%. Gerdau's and Usiminas' fell by 4.18% and 2.13%, respectively.

Such reductions put pressure on the Brazilian Stock market, which sank 0.58% and closed at 84,984 points. The commercial dollar climbed 0.64% and closed the day at R$ 3.265.

Ore stocks are also indirectly affected by American protectionism. Vale, which has a weight of nearly 10% in Ibovespa, had a sharp decrease of 3.24%. This was Vale's 8th drop in a row. The company has already lost approximately R$ 19 billion (US$ 5.82 billion) in market value.

This sequence of losses is in line with the drop in iron ore prices, caused by China's weak demand.

Translated by ANA BEATRIZ DEMARIA

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