Author Fast Webs<“>.>, <“>.>

* Decision moved back to July
* Could produce more special steels in US
* Urges tighter trade defense in Brazil

Gerdau Group has postponed until July its decision on moving ahead with a special steels plant it planned in Mexico to supply the North American automotive market, CEO Gustavo Werneck said Feb. 20.
Speaking with reporters, Werneck did not attribute the delay in the project decision, previously set for December 2024, specifically to the 25% import tariffs to be introduced March 12 by US President Donald Trump’s administration on imports of all steel products, including from Mexico.
CFO Rafael Japur said Gerdau announced the project in May 2024, envisioning an investment of $500 million-$600 million.
But,” Japur said, “several important things have changed. Nearshoring and geopolitics have changed, the governments of both the US and Mexico have changed, as well as some legal aspects in Mexico.
Japur said Gerdau is already one of the world’s biggest producers of special steels and could potentially produce more special steels at its existing installations in Fort Smith, Arkansas. A Mexico project could be divided into two smaller phases.
The US’ new proposed steel import tariffs could meanwhile benefit Gerdau’s existing US presence.
We’re currently working at 70% capacity in the US, and could use that idle capacity immediately if we get the orders, Werneck said. We believe that steel consumption in the North American market will grow due to investments in oil, gas, renewable energy and because of the Infrastructure Bill.”
Japur said the group currently delivers 4 million mt of products/year in the North American market and that this could rise to 5.5 million mt/year as a result of higher investments as the proposed higher US tariffs keeping imports out.
Expected changes in the US steel market could potentially allow Gerdau to improve its North America market product mix. Recently, Gerdau’s sales in the US have been around 20% rebars, a lower-value product, and this could now shift to 10% rebars with the remainder high-value product types, according to Japur.
Gerdau has been investing substantially in North America for the past seven years, including the expansion of its Midlothian, Texas, works, Werneck said.
We don’t need new rolling capacity in the US, he said.

Brazil steel sector hit by imports

Brazil’s steel sector continues to suffer from import penetration levels of around 18.5%, almost double the country’s traditional steel import levels of 10%, and with around 70% of current imports coming from China, Werneck said.
A quota and tariff import control system introduced mid-2024 has been ineffective in stemming import flows, he said.
It’s fundamentally important that the Brazilian government puts [more] trade defense measures into place,” Werneck said. “We believe this may happen in coming weeks. Otherwise we make may to rethink our investments in Brazil. It’s more difficult to be competitive in Brazil than in the US due to gas prices, and the famous ‘Brazil Cost.'”
Gerdau idled its Barao de Cocais long products works in Brazil’s Minas Gerais state last year due to market surplus and for the timebeing this will remain off-stream, Werneck noted. Its Sete Lagos pig iron production facility is producing only “partially,” he added.
However, the group will bring on stream its new 250,000 mt/year hot-rolled coil line in at its Ouro Branco flat products mill also in Minas Gerais in March, boosting Gerdau’s Brazilian HRC capacity to 1.08 million mt/year, he said.
Still, Brazil’s automotive sector is currently under pressure,” including from import pressure and growth in the nation’s steel demand is expected to slow later in 2025 due to the impact of high interest rates, Werneck added.
We could even take the decision to not produce at the new mill, he said.
Gerdau group sold a total of 5.06 million mt of steel products in 2024, down 1.8% from 2023, with net revenues down 3.2% to Real 25.96 billion ($4.55 billion). EBITDA fell 4.8% on year to Real 3.27 billion.