Gerdau’s North American Ops See Lower Shipments, But Outlook Positive

Gerdau’s North American business division operated at 85% of capacity in Q3 with an order book of 60 days, the company said. Shipments of 943,000 metric tons (1,039,479 net tons) were down 4.6% sequentially and 3.3% year over year (YoY) due to waning demand and high interest rates.

Lower shipments combined with declining prices resulted in a 19% YoY drop in net sales to R$6.332 billion (US$1.29 billion) and a 40% decline in Ebitda to R$1.555 billion (US$318.9 million).

The North American segment represents 45.7% of the company’s total consolidated Ebitda.

The company noted positive long-term fundamentals for steel sales due to US government spending initiatives such as the Inflation Reduction Act (IRA), Infrastructure Investment and Jobs Act (IIJA), and Chips Act, as well as solid demand in the Mexican market.

A project at the company’s mill in Midlothian, Texas, is underway to expand long steel production capacity to 2 million metric tons annually. A solar project at the plant is already operating close to its capacity of 80MW, the company said, which should contribute to a CO2 reduction of approximately 60,000 metric tons each year.

Gerdau’s North American business division includes its operations in the US and Canada and its Gerdau Corsa joint venture in Mexico. Its special steel mills are excluded. Gerdau operates 21 scrapyards and five shredders in the US and Canada.

Gerdau as a Whole

Companywide, Gerdau’s Q3 shipments of 2.755 million metric tons were down 6% from both the previous quarter and the same quarter last year.

Net income declined 26% sequentially and 47% year over year to more than R$1.592 billion (US$326.4 million) on sales that slipped 7% and 19%, respectively, to R$17.063 billion (US$3.499 billion).

Gerdau is the largest steel producer in Brazil and the largest scrap metal recycler in Latin America, recycling 11 million metric tons of scrap each year. It has steel manufacturing facilities in 10 countries with a total installed capacity of 21.7 million tons, according to its website.