By Brazil Stock Guide – Usiminas (USIM5) stepped up calls for stronger trade protection in Brazil, warning during its 1Q26 earnings call that import pressure remains elevated — and is shifting geographically. Even after antidumping measures targeting Chinese steel, executives said inflows from other Asian countries continue to weigh on the market, threatening the company’s recent margin recovery.
Margins Recover, But Fragile
The steelmaker reported consolidated EBITDA of R$653 million, up 56% quarter-on-quarter, driven by a deliberate shift toward higher-margin products. Management prioritized profitability over volume, increasing exposure to the automotive segment and value-added steel.
“The EBITDA shows a significant increase compared to the previous quarter, reflecting a better product mix in steel,” CFO Diego Garcia said during the call.
Steel shipments fell about 7%, but revenue per ton rose nearly 5%, pushing steel division margins back into double-digit territory — levels not seen since early 2025.
Imports Surge — And Shift Origin
Still, the competitive backdrop remains challenging. According to the company, total steel imports rose about 30% in 1Q26 versus the prior quarter, fueled by a rush of purchases ahead of new trade measures.
More striking was the shift in origin. Imports from Asian countries outside China jumped 78% year-on-year, with South Korea, Vietnam and other Southeast Asian producers gaining share. Egypt also emerged as a growing supplier, with volumes quadrupling.
“Certainly, imports in the first quarter were excessively high,” said Chief Commercial Officer Miguel Camejo.
Camejo linked the trend to broader global dynamics. “This creates an indirect effect, with these countries redirecting surplus material from their domestic markets to Brazil,” he said.
A Structural Flow, Not a One-Off
For Usiminas, the shift is not temporary. While recent import spikes were amplified by front-loading ahead of tariffs — inflating inventories across the supply chain — management views the trend as structural.
The mechanism is classic trade diversion. As Brazil restricts Chinese steel, producers from other regions move in to fill the gap, often under similar pricing conditions. In that sense, the underlying issue — global oversupply — remains unresolved.
High inventory levels may lead to a technical slowdown in the second quarter. But the more relevant risk lies further ahead, when competitive pressure could re-emerge once stocks normalize, unless broader trade defenses are implemented.
Antidumping Yet to Bite
Despite tariffs on cold-rolled and coated steel, Usiminas acknowledged that the measures have yet to materially impact market dynamics.
“It is a fact that we still do not see the impact of the measures implemented earlier this year,” Camejo said.
The lag is largely a matter of timing. Importers accelerated purchases in February and March, building inventories that are now delaying a rebalancing of domestic demand. The company expects normalization only in the second half of 2026.
Hot-Rolled Steel Becomes the Next Front
Against that backdrop, the ongoing investigation into hot-rolled steel imports from China, with a decision expected by July, is emerging as a key inflection point.
“The definitive implementation of antidumping measures for hot-rolled coil is very relevant,” Camejo said.
So far, the company has not seen a meaningful decline in imports of this product category and warns that another wave of front-loading could occur ahead of any new restrictions.
Costs Rise, Prices Follow
At the same time, cost pressures are building. Usiminas expects increases across key inputs — including slabs, coal and coke — as well as energy and freight, partly driven by higher oil and gas prices.
“Virtually all raw materials will see cost increases,” Garcia said.
To offset the pressure, the company implemented price hikes of about 5% in April across distribution and spot markets, while maintaining a disciplined approach focused on margins rather than market share.