SAO PAULO, Feb 24 (Reuters) - Steel distribution companies in Brazil sold 5 percent more flat products in January than in the year-earlier period, an industry group said on Friday, signaling what is likely to be a short-lived recovery that loses momentum next month.
Distributors sold 356,600 tonnes of products last month, or about 9.8 percent more than in December, Sindisider, a group representing flat steel wholesalers, said in a report. The rise helped push inventory of flat steel products 0.3 percent down to 997,900 tonnes last month, from December.
Inventory traded at 2.8 times sales of flat steel in January, sharply down from 3.1 times in December. The indicator, which is a gauge of unsold steel turnover, could end the year between 2.5 times and 2.8 times sales, according to industry executives.
According to Carlos Loureiro, president of São Paulo-based Sindisider, the recovery in sales will not be repeated in February - in an indication that the sector's worst crisis in years will linger for some more time.
"According to our expectations, purchases by and sales from distributors will likely drop 10 percent in February, reflecting a decline in demand for flat steel nationwide," the report quoted Loureiro as saying.
Distributors, who in the past two years piled up foreign-made slabs and plates due to a rally in the currency, now worry that imported steel could intensify the pattern of deindustrialization afflicting Latin America's biggest economy.
Loureiro told Reuters in an interview last month that steel distribution companies in Brazil might see sales of flat products growing this year at half the pace of 2011. Sales will remain especially weak through March because some infrastructure, logistics and oil investment plans are being executed at a slower pace than expected.
Imports surged 40.8 percent in January from a year earlier, totalling 183,600 tonnes, Sindisider said. The surge in imports might indicate that local mills' attempts to up prices for some of their products to stem recent cost increases likely failed.
Imports fell 11.6 percent from December, the group added.
Distributors represented by Sindisider and INDA, the sector's association, are responsible for 42 percent of Brazil's local flat steel sales and 36 percent of apparent steel consumption in the country.