Having been appointed by my fellow peers at IBS to the honorable assignment of presiding the Institute over the next two years, I take this position filled with energy and optimism in this particularly stimulating moment for the Country's development and, consequently, for opportunities opening for our steel industry.
It is comforting to know that the challenges to be faced will surely count with the support and experience from the management of the steel companies comprising our Board and Technical Commissions as well as from our technical staff known for their competence and professionalism.
I must point out the huge responsibility of being the successor of Rinaldo Campos Soares. With his broad experience in the steel industry and renowned competence and skillfulness, proven during his activities at USIMINAS as well as at several other companies and associations, including two terms as President of the IBS, Rinaldo leaves the Institute with a legacy of highly important accomplishments for the development of the sector. Continuing his work will be one of our priorities.
It must be said that continuity does not mean merely maintaining specific ongoing or approved projects and programs, but to preserve a concept of permanent evaluation and revision of the Institute's targets, strategies and programs so as to duly adjust them to the intensely transforming scenario affecting the steel industry on both domestic and international levels.
It is a widely known fact that, reflecting a relative stagnation of our economy, the domestic demand for steel products presented, for several years, high volatility and low growth.
The effective consumption of steel in the Country in 2005 was equivalent to that of 1997. Our per capita steel consumption was stagnated around 100 kg/inhab/y for a period of 23 years, until 2005. Such scenario had a negative impact on companies' results and discouraged bolder investment policies towards expansion. In a little growing market, companies focused on improving quality and product mix, and on cost reduction, besides increasing environmental and social responsibility efforts. As a result of this, Brazilian companies have earned a place among the world's most competitive.
Fortunately, that scenario of volatility and stagnation has changed significantly since 2006, with growth rates, in the economy as well as in steel demand, that effectively brig us closer to other BRIC countries.
We have had a change in paradigm already observed in the steel industry since the beginning of 2002, which has been causing significantly improved results for the companies, and demanding increasing attention to the sector's structural changes and great dynamism to adjust to new situations.
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We are among those who believe that the new stage of growth observed in the Country will hold in the forthcoming years, for it is based on clearly developing policies such as: a) systematic increase in investment rates, specially in infrastructure sectors; b) income distribution and social inclusion programs which increase the consumers' base; c) more credit available for purchasing of and tax relief for capital goods encouraging investment and consumption and d) increased incoming foreign investments, now stimulated by the new rating achieved by the Country.
All these measures stimulate the growth of the domestic steel market and provide support for an optimistic view of the future.
The Brazilian steel industry is firmly committed to maintaining the domestic market fully supplied with steel produced in the Country with quality and prices compatible with global competition requirements.
We also want to deepen our partnerships with clients from the various production chains which we participate.
Always bearing in mind that the market does not consume steel directly, but steel-containing products, it becomes clear that the competitiveness of the companies comprising those chains is a basic condition for sustaining the market for various steel products.
Our targets, however, do not restrain to the domestic market. The Brazilian steel industry regularly exports 40% of its output, being one of the largest contributing sectors for the generation of positive trade balances for the Country, a position which should improve in the forthcoming years.
Another area with great potential is indirect exports, through steel-intensive products of higher added value, manufactured by the mechanical transformation industry.
This demands, however, deeper partnership relationships among the companies comprising the production chains as well as indispensable support from the government to reduce or eliminate bottlenecks and inefficiencies limiting the system's competitiveness and its better insertion in the international market.
We can state positively that the steel industry is doing its part. The companies within the Country's installed park are not only after improved competitiveness but are also developing investment programs worth US$ 27.1 billion to improve the current production capacity of 41 million t of crude steel to 56.3 million t by 2013. These projects are basically meant to supply domestic demand.
At the same time, we watch the development of new companies and new projects, mostly aiming at the exportation of semi-finished products. The conclusion of this process will lift Brazil to a major position in the new arrangement evolving in the world's steel industry, of placing basic production of steel in countries presenting comparative advantages for the supply of raw materials, with final transformation operations taking place at units closer to consumers.
This is a model that should prosper over the next years companies rationalize their operations and reduce their production costs. At the same time, it promotes development and adds value to exports of countries nestling projects of such nature.
Ongoing semi-finished production projects for exportation plus those already announced as to be implemented in Brazil comprise an addition production capacity of 24 million t of crude steel and investments of US$ 18.6 billion for the 2009-2015 period.
The conclusion of ongoing projects and the effective development of those being studied - some of which depending partly on the market perspectives - should increase the Country's steel production installed capacity to around 83.3 million t between 2015 and 2016.
In short, the scenario forecast by part of the steel producing companies is of full capacity to supply the domestic market and significantly increasing exportation.
As for steel consuming sectors, a quick analysis also shows optimism regarding growth perspectives for their respective markets, with investment plans as ambitious as the demands forecast. Among those, we must mention plans related to oil and gas, shipbuilding, car making, capital goods and civil construction which, together, account for around 84% of the Country's demand for steel.
The structured effort by the Government to support the growth and improvement of the industry must also be recognized. Besides the PAC and the PROMINP, we recently had the launch of the Productive Development Program, meant to provide benefits to 25 sectors mainly by tax relief, tax and financial incentives and measures to tackle bureaucracy.
It is important to recognize the positive effects of these programs, but we must also acknowledge they may not suffice to ensure the long-term sustainable development process required by the Country. This demands a set of systemic, deeper measures, which will not be achieved unless structural reforms are implemented, specially, in the economic field, the labor and tax reforms.
These are complex actions, difficult to approve and to implement, but that must be addressed immediately, enjoying the favorable economic scenario. We must remember the old saying, "You must fix your roof when it's sunny".
Furthermore, the time necessary for the implementation of the reforms must not be only one of expectations for, in the meantime, there are conditions to promote other equally important improvements, comprising measures which will certainly contribute for the reinforcement of growth and to improve the favorable atmosphere for investments in the Country. Among others, we would like to mention: a) a stricter tax policy, to allow the indispensable reduction of interest rates and b) a better definition of the role of regulating agencies so as to provide more attractiveness and security for investments in critical infrastructure sectors of the Country.
