Brasilia opened a fresh anti-dumping case against Chinese wire mesh on 1 October as the national steel lobby warned that falling Chinese volumes are being replaced by Vietnamese ones, and ArcelorMittal tied a ten billion real investment to import share falling further
SAO PAULO AND BRASILIA, 3 OCTOBER 2026
Brazil spent this week demonstrating both the reach and the limits of trade defence policy. On 1 October, the foreign trade secretariat opened an anti-dumping investigation into zinc-coated hexagonal wire mesh from China on the basis of an alleged dumping margin of 233.7 per cent. On the same day, the national steel institute published figures showing that the import problem the country has spent two years fighting has not gone away, it has changed address.
And in the space between those two developments, ArcelorMittal Brasil made the connection explicit, attaching an investment programme of roughly 10 billion reais, about 1.9 billion United States dollars, to a condition: that imports keep falling.
The new case
The wire mesh investigation, reported by SteelOrbis on 1 October, covers zinc-coated hexagonal wire mesh under HS 7314.41.00. The petition was filed on 30 January 2026 by three Brazilian producers, Morlan, Belgo Bekaert and Comep.
The numbers in the initiation are striking. The Brazilian authority constructed a normal value of 3,263.27 dollars a tonne, using Mexico as the surrogate market, and compared it against a Chinese export price of 977.79 dollars a tonne. The resulting dumping margin of 233.7 per cent translates into an absolute figure of 2,285.48 dollars a tonne. The investigation is scheduled to run ten months, extendable to eighteen.
The use of Mexico as a surrogate market is the technically significant element. Where an investigating authority declines to use a respondent’s home market prices or costs, typically on the grounds that those costs are distorted, it constructs normal value from a third country deemed economically comparable. The choice of surrogate drives the outcome, and a surrogate whose cost structure sits well above the respondent’s produces a wide margin almost mechanically. Chinese exporters contesting Brazilian cases have challenged surrogate selection before, and exporters in adjacent product categories should assume Mexico will be proposed again.
A problem that moved rather than ended
The more consequential news on 1 October came from Instituto Aco Brasil, the Brazilian steel association, which published an assessment of where two years of trade defence activity has actually landed.
The headline numbers are better than they were. Brazilian steel imports are forecast to fall approximately 15 per cent across 2026, with rolled steel inflows down by around 800,000 tonnes. Imports are running at about 18.5 per cent of domestic consumption against 22 per cent in 2025. ArcelorMittal’s own figures put import penetration at over 25 per cent in January 2026 and around 16 per cent by July and August, with first-half imports down 17.6 per cent year on year.
The composition, however, has shifted in a way that complicates the story. China’s share of Brazilian steel imports has fallen to about 50 per cent, down from 64 per cent on an earlier reading. Vietnamese shipments, meanwhile, are reported to have risen more than fivefold.
That is the signature of trade diversion rather than trade reduction. Duties applied to a specific origin change the flag on the bill of lading before they change the volume on the quay. Brazilian steel imports are still projected at 4.9 million tonnes in 2026, roughly twice the annual average of the 2000 to 2019 period.
Marco Polo De Mello Lopes, who heads Instituto Aco Brasil, put the association’s reading of it plainly in remarks reported on 1 October: “This isn’t a temporary or cyclical problem, it’s structural.” He identified the association’s objective in equally direct terms: “The top priority is to reclaim the domestic market, a large share of which has been taken by unfairly traded imports.”
Andre Gerdau Johanpetter, chairman of Gerdau, has pressed a related argument, calling for what he described as a long-term state policy rather than a sequence of individual cases.
Background: two years of escalation
Brazil’s current trade defence posture began taking shape in 2024, when the government enrolled sixteen tariff classifications in a tariff-quota mechanism that applies a 25 per cent penalty rate to volumes above a historical reference quota. At the time those imports carried a 10.8 per cent rate, so the quota mechanism represented a substantial step up for over-quota volume without the evidentiary burden of a full anti-dumping proceeding.
The mechanism was widely regarded as insufficient. Imports continued to grow, reaching 5.7 million tonnes in 2025, up 20.5 per cent year on year and representing roughly 21 per cent penetration of the domestic market.
The response in early 2026 was a shift from quotas to duties. On 28 January 2026, the government decided on a 25 per cent increase covering nine classifications of pre-painted steel from China and India, for a period of up to five years. In February, definitive anti-dumping duties were imposed across pre-painted, cold-rolled and coated steel, predominantly against China with one case involving India, at rates between 284.98 and 709.63 dollars a tonne. Instituto Aco Brasil welcomed the January decision as another step in the commercial defence system to contain predatory steel imports.
The market absorbed the February duties quickly. Carlos Loureiro, executive president of the distributors’ association INDA, had anticipated the timing, telling Fastmarkets in February that the association expected the measures either in January or at the latest in February 2026. Distributors interviewed at the time made the distinction that has defined the Brazilian debate throughout. One, speaking anonymously, said: “We are not against imports, only against dumping imports.”
Within weeks of the February duties, traders were reporting that Vietnamese material looked competitive. Eight months later, Vietnamese volumes are up more than fivefold and the association is describing the problem as structural.
The investment question
What makes the Brazilian case distinctive is the degree to which producers have made capital allocation explicitly conditional on trade policy, and said so publicly.
ArcelorMittal Brasil set out a programme of roughly 10 billion reais, comprising a Tubarao expansion of 4 to 5 billion reais, a Pecem project of about 5 billion reais, approximately 960 million dollars, and a new coating line with capacity of 560,000 tonnes a year. The Pecem hot-rolled coil expansion, which research service IndexBox reported on 30 September was nearing a final decision, would add around 1.5 million tonnes of annual capacity. The company has invested some 25 billion reais in Brazil since 2022, and a final investment decision on the current programme is expected by the end of 2026.
Jorge Oliveira, chief executive of ArcelorMittal Brasil, acknowledged that the existing measures have had an effect: “You can’t say the measures didn’t help. They did.” But he attached a clear condition to the capital: “We are prepared to invest, as long as the import equation is right for our growth.” He described imports as remaining far from a bearable level, and set the company’s reference point at roughly 10 per cent of the market, which he characterised as the historical average.
Oliveira also framed the horizon in a way intended to outlast any single administration: “Our decision today is long-term and goes beyond governments.”
There is a tension in the available figures that investors should note. IndexBox’s account put the current import share at about 18 per cent and reported that the Pecem project requires it to fall to no more than 12 per cent, while the company’s own commentary cited 16 per cent and a target around 10 per cent. The discrepancy may reflect different measurement bases, flat products against all steel, or different periods. It is material to anyone modelling the probability of the final investment decision, and it should be clarified from company disclosure rather than from secondary reporting.
Stakeholder positions
The Brazilian government, through the foreign trade chamber and the foreign trade secretariat, has been expanding its toolkit steadily: quotas with punitive over-quota rates, definitive anti-dumping duties, and a continuing pipeline of new investigations of which wire mesh is the latest. Its stated justification rests on global overcapacity data and on findings of subsidisation in the Chinese steel sector.
Domestic producers credit the measures while arguing they are insufficient. Their asks are specific: an import share around 10 per cent, a long-term state policy insulated from electoral cycles, and relief from what Brazilian industry calls Custo Brasil, the composite of energy, gas, logistics and tax costs that it argues leaves domestic mills structurally disadvantaged even against fairly traded imports.
Chinese producers and the Chinese government have not responded publicly to the 1 October initiation. The observable Chinese response to the earlier Brazilian duties has been commercial rather than diplomatic, taking the form of substitution through other Asian origins.
Importers and distributors have largely stopped contesting the anti-dumping cases on principle and have shifted to managing origin risk. The distributors’ position of opposing dumping but not imports has proved durable, and it is the position that will determine how hard the sector resists if Brazil extends cases to Vietnam and other Southeast Asian origins.
Downstream users have been notably quiet in the public record, which is itself informative. Brazilian steel-consuming manufacturers in automotive, construction and appliances face the same cost pressure that downstream users face in every protected market, but they have not organised a visible counter-lobby. ArcelorMittal frames its expansion around precisely those three sectors.
Economic impact
The macro framing from Instituto Aco Brasil is that Brazil is heading for a manufactured goods trade deficit of 156.8 billion dollars, a figure the association uses to argue that steel is one front in a broader deindustrialisation problem rather than a standalone sectoral complaint.
For the steel market itself, the effect of the duties has been to lift and hold domestic prices. Following the February measures, Fastmarkets reported cold-rolled coil at 610 to 630 dollars a tonne, hot-dipped galvanized at 660 to 700 dollars and Galvalume at 770 to 820 dollars. Flat steel imports in December 2025 ran at 205,700 tonnes, down 22.6 per cent from November but still up 66.6 per cent year on year, which captures the pattern of an import wave that was slowing but from an elevated base.
A further factor shaping Brazilian mill economics is the United States tariff environment. Brazilian plate exports to the United States ran at 1.77 million tonnes in January to August, and European plate shipments at 1.04 million tonnes over the same eight months. American tariffs on Brazilian steel have pushed volume toward other export destinations, which in ArcelorMittal’s framing makes domestic processing a more attractive use of Brazilian slab than exporting it.
The limitation of the current approach is visible in the Vietnamese numbers. Origin-specific duties applied to an industry with global excess capacity shift trade rather than eliminating it, and each shift requires a new case with its own eighteen month timetable. The gap between a surge beginning and a duty landing is the window in which the import share moves, and it has so far been long enough for substitution to arrive.
Implications for importers, exporters and supply chains
For exporters shipping steel to Brazil, the first lesson of this week is that origin substitution buys time, not safety. Vietnam’s fivefold increase is precisely the kind of pattern that attracts an anti-circumvention inquiry or a fresh anti-dumping petition, and the Brazilian authorities have shown they will open cases on relatively narrow product lines. Exporters from Vietnam, India, Turkey and other origins now supplying Brazil should assume they are in scope for 2027 and should be preparing cost and pricing documentation accordingly rather than after a petition is filed.
The surrogate country question deserves specific attention. Chinese exporters facing Brazilian proceedings should expect Mexico to be proposed as the surrogate market and should develop a reasoned alternative early in the proceeding, because surrogate selection is typically settled before respondents have fully engaged and is difficult to reopen afterwards.
For importers and buyers in Brazil, the planning assumption should be a continuing rise in the landed cost of imported steel and a widening list of covered products. Procurement teams should map their purchase lines against both the active duty orders and the open investigations, and should recognise that a product currently outside scope may be inside it within a year. Contracts for forward delivery should allocate duty risk explicitly, because a definitive duty imposed between order and arrival is a loss that lands somewhere.
For producers and traders elsewhere in the world, the Brazilian case is a useful marker of where steel trade is heading. Brazil accounts for roughly 1.8 per cent of world crude steel production against China’s 51.9 per cent, and the asymmetry is the whole argument. A mid-sized producing economy facing a supplier more than twenty-five times its size has concluded that conventional, case-by-case trade defence is too slow, and its industry is now asking for something more structural.
That request is being made simultaneously in Brussels, in London, in Jakarta and in Brasilia. The specific instruments differ, quotas in Europe, safeguards in the United Kingdom, anti-dumping investigations across Southeast Asia and Latin America, but the direction is uniform. Steel supply chains that were built on the assumption of a broadly open global market are being rebuilt on the assumption of a segmented one, and the companies that map their origin exposure first will carry the lowest cost through the transition.
For logistics and sourcing teams specifically, three practical steps follow. Map every steel input to its melting origin, not just its shipping origin, because that is the basis on which an increasing number of jurisdictions now assess duty liability. Maintain a watchlist of open investigations in each destination market rather than only a list of duties in force, because the commercially relevant date is the initiation, not the final determination. And qualify at least one alternative origin for every critical grade before a duty makes it urgent, because qualification timelines in steel run to months and cannot be compressed.
The Custo Brasil argument
Running underneath the trade defence debate is a domestic argument that Brazilian producers consider inseparable from it.
Custo Brasil, literally the Brazil cost, is the shorthand Brazilian industry uses for the composite burden of electricity and gas prices, logistics costs, tax complexity and regulatory overhead that it argues leaves domestic manufacturers uncompetitive even against fairly traded imports. In steel specifically, natural gas and electricity are material inputs, and Brazilian industrial energy prices have been a persistent complaint.
The significance for trade policy is that it changes what producers are asking for. An industry that believes it is losing to dumping asks for duties. An industry that believes it is losing to dumping and to its own domestic cost structure asks for duties plus energy reform plus tax reform, and treats the duties as insufficient on their own. That is the Brazilian position, and it explains why the association continues to describe the problem as structural even as imports fall.
It also explains the conditionality in ArcelorMittal’s investment language. A company that regarded trade defence as the whole answer would commit capital once duties were in place. A company that regards trade defence as one of several necessary conditions will keep the capital conditional, which is what has happened.
How a Brazilian anti-dumping case runs
For exporters unfamiliar with the Brazilian system, the procedural shape matters.
Investigations are conducted by the foreign trade secretariat, which handles the technical determination of dumping, injury and causation. The decision on whether to impose duties, and at what level, rests with the foreign trade chamber, a ministerial body that can and does apply a public interest assessment. That two-stage structure means a technically affirmative determination does not automatically produce a duty at the calculated margin. Brazilian practice includes examples of duties set below the full dumping margin, or suspended, on public interest grounds where downstream impact was judged severe.
Timelines run to ten months in the ordinary course, extendable to eighteen. Provisional duties may be applied after a preliminary determination, typically secured by deposit.
The practical implications for a respondent are consistent with those in other jurisdictions but with one Brazilian emphasis. Because the public interest stage is real, downstream Brazilian users of the product have a meaningful channel of influence, and exporters who can mobilise their Brazilian customers to participate in the proceeding materially improve their position. Exporters who engage only through their own legal submissions leave that channel unused, and in a market where the downstream lobby has so far been quiet, it is the channel with the most unexploited leverage.
What to watch
The wire mesh case will reach a preliminary stage within months and will test whether the 233.7 per cent margin survives respondent participation. More importantly, it will show whether Mexico holds as the surrogate.
The larger question is whether Brazil extends its trade defence attention to Vietnam and other Southeast Asian origins. The association has named the problem publicly, which is usually the step before a petition.
And the ArcelorMittal final investment decision, due by the end of 2026, is the clearest available test of whether trade defence policy actually mobilises domestic capital or merely raises domestic prices. The company has told the market what number it is watching. The market can now watch the same one.