Longs producer and metal recycler Gerdau reported lower second-quarter production and shipments due to several mill outages.
In its Q2 earnings report, Gerdau said its melt shop in Whitby, Ontario, was shut down longer than anticipated for maintenance. This resulted in higher freight costs for moving billets. An investment at the Whitby mill was completed in June and is currently in the ramp-up stage, the company noted.
Additionally, rebar production at Gerdau’s mill in Charlotte, N.C., was temporarily halted for maintenance during the quarter.
The above factors resulted in lower Q2 crude steel production in the North American division –1.033 million metric tons, down 12.9% sequentially and 9.8% year over year. Shipments of 975,000 metric tons were down 11.7% quarter on quarter and 13% year over year.
Sales in the North American business division totaled Brazilian Real $6.8 billion (US$1.39 billion) in Q2 – a drop of 12.7% from the prior quarter and 20.6% from the year-ago quarter. This was mainly due to lower shipments as well as the depreciation of the dollar against the Brazilian real, the company said.
“Despite higher inflation and interest rates, it is expected that the pace of non-residential construction will remain stable and that the infrastructure package announced by the US government will increase demand for steel,” Gerdau commented in the earnings report. It cited the Inflation Reduction Act (IRA) and Chips Act in particular as providing good prospects for demand.
Gerdau as a whole posted Q2 net income of R$2.14 billion (US$438 million) on net sales of R$18.3 billion (US$3.74 billion). This compares to Q2’22 net income of R$4.3 billion (US$880 million) on sales of R$23 billion (US$4.7 billion)
A solar unit at Gerdau’s Midlothian mill in Texas started up in June. It is expected to reach its total generation capacity of 80MW as early as next quarter, the company said.
Gerdau is based in Brazil with operations throughout the Americas. Its North American business division is comprised of nine mills across the US and Canada and three joint-venture mills in Mexico. It excludes its special steel operations in the region.
Laura MillerRead more from Laura Miller
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