Brazilian Steel Giant Usiminas Reports 62% Profit Plunge Amid Chinese Import Onslaught

Brazil’s steel industry is reeling under a flood of low-cost imports. Usiminas, one of the country’s largest steelmakers, saw its second-quarter 2025 net profit plummet to R$128 million—a staggering 62% drop from the previous quarter. This sharp decline underscores a deepening crisis as Chinese steel exports, priced below domestic production costs, erode local profitability. While Usiminas managed to stay profitable compared to a loss in Q2 2024, operational margins collapsed from 11% to 6%, with operating profit (EBITDA) halving to R$408 million.

Chinese Steel Imports Reshape Brazil’s Industrial Landscape

Cheaper Chinese steel shipments surged into Brazil throughout early 2025, pressuring Usiminas and peers like Gerdau. Despite stable domestic sales of 1.08 million tons, Usiminas’ revenues dipped slightly to R$6.6 billion amid price cuts to retain customers. Industry data from the Brazil Steel Institute (IABr, June 2025) shows imports now account for 28% of the market—the highest in a decade. Trade barriers, including Brazil’s 25% import tax, have failed to stem the tide due to China’s aggressive export subsidies. Usiminas CEO Marcelo Chara warned in the Q2 earnings report: “Unfair competition and high interest rates threaten reinvestment in Brazil’s industrial base.”

Iron Ore Exports and Debt Cuts Offer Temporary Lifeline

Amid steel-sector turmoil, Usiminas leaned on iron ore exports for relief. Sales surged 11% quarterly to 2.46 million tons—a 22% annual jump—as global demand offset domestic headwinds. This fueled a critical cash flow turnaround: R$281 million in free cash generation reversed a prior outflow, enabling a 25% reduction in net debt to R$1.05 billion. Diversification into mining provided essential breathing room,” noted economist Luiz Alves of Fundação Getúlio Vargas (July 2025). “But iron ore prices are volatile. Long-term stability requires steelmaking recovery.”

Policy Gridlock Puts 50,000 Jobs at Risk

With Chinese imports squeezing margins, Usiminas deferred R$200 million in furnace upgrades—a move reflecting industry-wide caution. Brazil’s National Steelworkers Union estimates 50,000 jobs could vanish by 2026 without stronger safeguards. Government talks with China stalled in May 2025 after Beijing dismissed allegations of dumping. Meanwhile, Brazil’s 14.25% benchmark interest rate—among the world’s highest—has raised borrowing costs for manufacturers. “Without credit access or tariffs, mills face impossible choices,” said union leader Marcio Castro. “Cut jobs, reduce output, or shut down.”

Usiminas’ fight for survival epitomizes Brazil’s industrial crossroads: innovate amid predatory imports or cede the market to foreign suppliers. As Chinese steel imports Brazil’s economy bleeds jobs, urgent policy action is non-negotiable—monitor trade negotiations at Brazil’s Ministry of Development, Industry and Trade (MDIC) and demand accountability from elected leaders.

Must Know

Q1: How did Chinese steel imports affect Usiminas’ Q2 2025 results?
Chinese steel shipments undercut Usiminas’ pricing power, slashing quarterly net profit by 62% to R$128 million. Operating margins halved to 6% as revenue dipped despite stable sales volumes.

Q2: What positives emerged from Usiminas’ report?
Iron ore exports jumped 22% year-on-year. Free cash flow hit R$281 million, reducing net debt by a quarter. This financial flexibility is vital for navigating import pressures.

Q3: Why hasn’t Brazil stopped the steel import surge?
Existing 25% tariffs failed due to China’s export subsidies and production overcapacity. Diplomatic efforts stalled, leaving local producers exposed without new trade defenses.

Q4: How does this impact Brazil’s economy?
Steel supports auto, construction, and energy sectors. The IABr warns unchecked imports could cost 50,000 jobs and R$10 billion in lost GDP by 2026 if investments stall.

Q5: What solutions is Usiminas pursuing?
The company is boosting iron ore exports and cutting debt to weather the storm. It urges higher tariffs, anti-dumping probes, and lower interest rates to revive local manufacturing.