Brazil’s steel and oil industries are evolving amidst political challenges and global trade dynamics, as the country positions itself as a key player in the new Silk Road.
Brazil has been highly sought after in the industries of steel, oil and gas (extraction & production). This is cultivated by the new Silk Road Brazil is paving to China, enabling the country to transport goods to China at a fraction of the current cost. Amidst challenging political conditions Brazil has become increasingly resilient in the industrial domain whilst not losing sight of their sustainable goals.
Steel
Brazil is one of the largest steel producers in the world. It is instrumental in the production of home appliances, automobiles, and civil construction. Brazil’s steel sector experienced a 6.6% year-on-year increase in crude steel production in March 2025, reaching 2.944 million tonnes, according to data from Instituto Aço Brasil.
Domestic sales strengthened, rising by 10.7% to 1.88 million tonnes in the same month. For the first quarter of 2025, crude steel output totalled 8.477 million tonnes—up 2.8% compared to the previous year—while internal sales advanced 8% to 5.274 million tonnes.
These improvements suggest a recovery in demand from crucial industries such as construction and automotive, both of which had previously seen limited growth. However, the sector remains under strain due to a sharp increase in imports and evolving trade regulations.
Steel imports surged by 36.5% in March compared to the previous year, hitting 663,000 tonnes and now making up roughly 25% of domestic consumption. Around 70% of these imports come from China, raising industry-wide concerns over potential market distortion and unfair competition.
The government’s quota and tariff mechanism, introduced in June 2024 to stem the flow of foreign steel, has not delivered the expected results. By January 2025, importers had already used up 74% of the annual quota, with the highest usage seen in galvanised and cold-rolled sheet categories.
Oil & Gas
Brazil’s national or producer, Petrobras, has announced the approval of exploration in Brazil’s sought after offshore region–areas in five sedimentary basins, including the Potiguar and the Foz do Amazonas, in deepwater near the equator.
Brazil plans to make available 173 oil blocks located across both onshore and deepwater areas in the country’s northeast and south, under concession-based agreements. Of these, 47 blocks are situated in the Foz do Amazonas basin, where Petrobras is seeking approval to drill its first well following the suspension of its exploration efforts in 2023. According to the Ministry of Mines and Energy, this basin may hold reserves comparable to those identified in Suriname and Guyana, where Exxon Mobil Corp. has uncovered billions of barrels of oil.
The new Silk Road
During his visit to Peru in November last year, Chinese President Xi Jinping officially opened the Chancay Port, a vast infrastructure development emerging along the Pacific coastline. His visit went far beyond a ceremonial gesture.
Located roughly 75 kilometres from Lima, Xi’s presence marked a significant moment in China’s broader global trade strategy. The $3.4 billion development, led by China’s state-owned shipping giant COSCO, is set to reduce logistical distances and costs. It also forms a crucial component of the Belt and Road Initiative — China’s ambitious plan to enhance its global trade network and geopolitical reach.
Analysts suggest the port, expected to become South America’s largest, represents far more than physical infrastructure. It signals China’s determination to reshape international trade flows, positioning the Pacific as the preferred route for Latin American exports.
This strategic port will play a pivotal role in strengthening China–South America trade ties, particularly with Brazil. The value of Brazilian exports to Asia has surged dramatically, rising from $8.8 billion in 2002 to $152.4 billion by 2023.
Challenges
The United States has introduced a 25% tariff on all steel imports, a move expected to cut Brazil’s steel exports by 11% and reduce production by 2% in 2025. This could result in an estimated loss of $1.5 billion in export earnings and a decline of 700,000 tonnes in output.
Although the broader economic repercussions for Brazil may be contained, the steel industry’s dependence on the U.S. market and its sensitivity to competition from Asia expose it to significant global trade risks.
Brazilian steel producers now enter a challenging phase, contending with surging import volumes, ineffective protective measures, and uncertain international demand, while domestic market growth remains modest at best.
Written by:
*Dr Iqbal Survé
Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN
*Cole Jackson
Lead Associate at BRICS+ Consulting Group
Chinese & Latin American Specialist
**The Views expressed do not necessarily reflect the views of Independent Media or .
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