ArcelorMittal said that low steel demand, one of a slew of challenges facing the Brazilian steel industry, should begin to reverse in the next few years as government efforts to upgrade the country's infrastructure gather momentum.

Mr Benjamin Baptista CEO of ArcelorMittal Brasil in an interview "We should see per-capita consumption on the order of 250 kilograms. It's very clear, if you go through Brazilian airports, Brazilian roads, Brazilian ports, you'll see why. We have an enormous deficiency in infrastructure."

Mr Baptista said that infrastructure projects are a primary driver of steel consumption. The situation is improving thanks to government efforts to stimulate investment. But it's a slow thing.

Mr Baptista said that "Economists say the adjustment of the currency is inevitable in Brazil, and it should occur in coming years. The economy of Brazil won't sustain this currency appreciation for much more time."

According to the World Steel Association figures and local industry estimates, currently, Brazil's current per-capita steel consumption of 128 kilograms per inhabitant is less than one-third that of China and less than half of Turkey's. Stagnant consumption is among the causes for low capacity utilization rates that, along with an overvalued currency and high production costs, have sapped Brazilian steel companies' profits in recent quarters.

Mr Dilma Rousseff the administration of Brazilian President has undertaken massive infrastructure investments under its Accelerated Growth Program, or PAC. The program calls for investments equal to some USD 475 billion during the period of 2011 through 2014, but specific projects have suffered problems ranging from cost overruns to licensing and other delays.

Another issue ArcelorMittal sees working itself out in the next two to three years is the position of Brazil's currency, which has led to sharp growth in steel imports over the past decade. The Brazilian real has appreciated some 40% over the past decade, even as the country faced inflation of 5% or 6% most years.

Source - www.foxbusiness.com