UPDATE 1-Brazil steel sales seen returning to pre-crisis levels-IABr
* IABr sees steel sector on the path to recovery * Output to decline 1.1 pct this year, group says * Apparent consumption seen rising 4.3 pct in 2013 RIO DE JANEIRO, Nov 27 (Reuters) - Steelmakers in Brazil will likely witness a recovery in sales and a reduction in excess capacity next year as recent government measures to revive growth are bearing fruit, an industry group said on Tuesday. Domestic sales of rolled and other steel products may rise to 23.4 million tonnes next year, up 7.8 percent from an estimated 21.7 million tonnes in 2012, Instituto Aço Brasil said in a statement on Tuesday. Sales will probably rise 1.3 percent this year, said the group, known as IABr. Apparent consumption, or the sum of domestic sales and imports of steel, is expected at 26.4 million tonnes next year even as imports are seen down by nearly 1 million tonnes, IABr added. The tone for next year is "of an improvement," following a couple of weak years for an industry that employs about 140,000 in the country. Brazil's steel industry is facing one of its worst crises in years. Mills in Brazil are grappling with global steel overcapacity and weak prices, rising costs for some raw materials such as coal, and a domestic output glut. "It is believed that the measures that are being adopted by the government will propel growth in the coming year and will be reflected in better results for the sector," the statement said. Sales of rolled steel in the country are seen returning next year to levels not seen since 2008, IABr said. Idle capacity in raw steel production should be down by seven percentage points next year, the group estimates. This year, President Dilma Rousseff has trimmed taxes, extended financial aid to ailing industries and imposed trade barriers on imported steel and other products to revive a flagging manufacturing industry. Despite all that, earnings at Brazil's largest mills have plummeted and inventory and idle factory capacity have both remained high. IABr President Marco Polo de Mello Lopes had said in September that industry estimates for this year might have to be lowered, because of the crisis. Output likely fell this year by 1.1 percent, exports by 11 percent while apparent consumption probably rose 1.1 percent, the group said.
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