Brazil's Usiminas plans to raise steel prices by Friday -source

SAO PAULO Thu Feb 28, 2013 2:35pm EST

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SAO PAULO Feb 28 (Reuters) - Usinas Siderúrgicas de Minas Gerais SA, Brazil's largest flat steel producer, plans to increase prices for some products as early as Friday, in a bid to boost profit margins, a source with knowledge of the situation told Reuters.

Usiminas, as the company is known, informed distributors that prices for hot- and cold-rolled steel, coil and coated products could be increased between 6 percent and 8 percent. The increases, which take effect March 1, come on top of an average 5 percent hike carried out in January, said the source, who is not authorized to speak on the record.

Usiminas' decision comes at a time when the government has shown preoccupation with inflation, which is climbing at its fastest pace in a year. In recent weeks, Usiminas rivals such as Cia Siderúrgica Nacional SA have announced a series of price hikes, while paper and pulpmaker and petrochemical companies ramped up prices for wholesalers to restore margins.

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, Instituto Aço Brasil, the group representing the sector, said in November.

News of price increases are generally seen as encouraging for mills, which have grappled with global steel overcapacity and weak prices, rising costs for some raw materials such as coal, and a domestic output glut over the past three years.

Distribution companies consulted by Reuters have also said that Cia Siderúrgica, known as CSN, is also testing the waters with a potential increase for March. Both Usiminas and CSN declined to comment.

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