Founded in 1941, SID is a fully integrated Brazilian steel company that as the name implies used to be a state-owned company until 1993. Full integration means that SID can not only produce steel products that are in high demand, but also owns iron ore mines, railroads, and sea ports. This makes SID supremely positioned to support the increasing steel demand in Asia, the Middle East, and even its own governmental demands for increased infrastructure and urbanization.
The primary benefit of this integration will undoubtedly be its ability to tolerate, if not ignore, the cost of goods impact from the increase in iron ore prices.
This could give SID a dramatic advantage on the international steel market by undercutting other steel manufacturers thanks to lower than industry averages in basic raw materials (i.e. iron ore). Ostensibly, this sort of lowball price war is highly unlikely in the short term thanks to strong global demand, but provides SID with a several advantages rarely seen thanks to a higher than normal profit margin potential compared to it’s competitors.
