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Gerdau confident in US recovery: exec

Keywords: Tags  André B. Gerdau Johannpeter, Kalyani Group, World Steel Association, Chris Prentice

NEW DELHI — Brazilian steelmaker Gerdau SA is confident that U.S. economic growth will be sustained in 2013, according to chief executive officer André B. Gerdau Johannpeter.

Despite worldwide economic uncertainty and a global steel market that is in oversupply, there is room for expansion efforts in certain regions as long as it is tailored to those markets, Johannpeter told AMM on the sidelines of the World Steel Association (WorldSteel) annual conference in New Delhi.

One of the regions in which the steelmaker expects to see continued recovery is the United States, where the company is on track with plans to upgrade and expand its special-bar-quality (SBQ) operations to feed into the automotive market.

Johannpeter said he has faith in the country’s continued recovery and the growth of its manufacturing sector. "It’s not a quarter recovery: You have to look long-term." He said he expects the results of the presidential election next month to eliminate some uncertainty in the short-term.

However, even as the company moves forward with expansions and upgrades at existing mills, the company’s plans for a greenfield steelmaking facility in the United States remain in "preliminary" stages, the company said Wednesday.

While the greenfield project might not be under way anytime soon, the company has resumed its joint-venture project with Aceros Corsa SA de CV to build a steelmaking facility in Mexico, which is expected to produce 1 million tonnes of steel and 700,000 tons of structural profiles annually (, Aug. 3).

"Our project in Mexico is a sign we’re seeing the recovery," Johannpeter said, noting that the facility will feed the U.S. and Canadian markets as well as Mexico.

Johannpeter said Gerdau’s expansion strategy involves selecting not just geographic regions that make sense, but also key markets within those regions. For example, Gerdau is looking to move up the value chain in its home country with a plan to produce flat products. "Today we export slabs, we supply the domestic market," he said. "We’re adding value to our mix."

The expansions in Brazil include upstream moves as well. "We’re going to get into the mining business in Brazil," Johannpeter said, noting that the company is still looking for a partner on that project (, May 3).

Asked about plans to manage raw materials in the United States, Johannpeter said the company has a "good position" in scrap processing and plans to continue investing in its existing yards.

As for expansion outside the Americas, Gerdau is ready to ramp up its rolling mill in India, the company’s first operation in Asia. "We have the mill built," Johannpeter said, noting that he visited the plant—a joint venture with Kalyani Group—before arriving in New Delhi for the WorldSteel meeting. "We’re going to roll steel by year-end."

As for 2013, there will be continued growth in steel consumption in Asia and the Americas, even if that growth is not as strong as had been expected or hoped, he said. "We’d all like China to grow by double-digit growth again. But if it grows 7 or 8 percent, it’s still good growth. This is growth. It’s not crisis."

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