CRU: Gerdau may opt to invest in US instead of Mexico amid tariff shake up

“We are reviewing all our analyses in light of what is happening,” CEO Gustavo Werneck was quoted as saying in an earnings call. “Special steel is a very important segment for us in the Americas. We are looking at the possibility of building the mill in two stages, or increasing production capacity in the United States.” He referenced the company’s mills in Michigan and Arkansas.

With regard to home-base Brazil, Werneck said the pace of investments Gerdau is making in the country could slow down from the current ballpark of BRL6 billion (around $1 billion) after 2026 if protectionist measures are not taken to level the playing field.

“It is frustrating to see that the Brazilian government is not quick to take trade defence measures,” he was quoted as saying in media reports. “We always compete as equals; we never need protection. The issue is to defend the industry against unfair competition.”

Brasilia last year imposed a 25% import tariff on eleven steel products to protect itself from Chinese competition. But Brazil’s steel makers are asking for more levies on other products.

Commenting on developments in the United States, Gerdau’s chief financial officer Rafael Japur said the company has seen an increase in its order backlog in the US and prices are adjusting due to the anticipated implementation of tariffs.

“For us, a more protectionist commercial environment, with reduced entry of imported materials at predatory prices that affected our profitability in the second half of 2024, is positive and opens up better prospects moving forward,” he said.

The executives were speaking after the company released its 2024 financial results: a 39% year-on-year decline in net profit to BRL4.60 billion with turnover 2.7% lower at BRL67.0 billion.

Editor’s note

This analysis was first published by CRU. To learn about CRU’s global commodities research and analysis services, visit www.crugroup.com.