BNamericas reported that Brazilian steelmaker Gerdau is seeing a very strong long steel demand from the country's construction sector.

Mr Andre Gerdau Johannpeter CEO of Gerdau said that "We are positively seeing domestic steel demand gradually recovering since 2008."

However, the steelmaker has noticed demand problems coming from the industrial sector, affected by fears of a deindustrialization process taking place locally.

He added that "We are undoubtedly facing challenges related to raw materials costs and deindustrialization. Those issues have created a challenging management environment. We should focus on improving cost management and operating margins."
The executive said that Gerdau has become more selective and rigorous in its capex decisions, and is focusing on those which present a better return on investment.

Following its new approach, the company announced that it will resume construction of a new BRL 1.1 billion steel plant in Mexico through subsidiary Gerdau Corsa. The new plant will have an installed capacity of 1 million tonnes per annum of steel and 700,000 tonnes per annum of rolled products, starting operations in H2 2014.

Regarding investments in Brazil, Mr Gerdau Johannpeter said that the company will continue to monitor the market and look for the right time to resume projects, as the company did in Mexico.

Gerdau's 2Q12 investments at existing operations totaled 850mn reais, bringing total investments in the first six months of the year to BRL 1.5 billion. From total second quarter investment, 78% was allocated to units in Brazil and the remaining 22% to units abroad.

Investments in fixed assets planned for the period from 2012 to 2016 are estimated at BRL 10.3 billion and include both strategic and maintenance investments.

Source - Business News Americas

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