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Gerdau sells first Brazil-made flat steel

Keywords: Tags  Gerdau, flat steel, flat-rolled steel, hot strip mill, Andre Gerdau Johannpeter, André Dias Pires, iron ore, Ana Paula Camargo

SÃO PAULO — Gerdau SA has started selling steel goods produced at its 770,000-tonne-per-year hot strip mill in Brazil, marking its official entrance to the country’s flat steel market.

The first cargoes of hot-rolled coil were shipped in October, but "sales volumes will not be disclosed due to commercial issues," chief executive officer André Gerdau Johannpeter said during a call Oct. 31.

Johannpeter had said at the beginning of August that the Porto Alegre, Brazil-based company’s hot-rolled coil sales volumes were estimated to reach 150,000 to 160,000 tonnes in 2013.

The facility, in the country’s southeastern Minas Gerais state, came on-stream in August, after its start-up date was postponed several times.

The captive flat steel production should improve Gerdau’s earnings before interest, taxes, depreciation and amortization (Ebitda) in future financial periods, finance vice president André Dias Pires said.

Ebitda for the company’s Brazilian steel division was 982 million reais ($448.6 million) in the third quarter of 2013, up from 691 million reais ($315.6 million) a year earlier.

Separately, Gerdau plans to sell 4 million to 5 million tonnes of iron ore to third parties in 2014, up from an estimated 700,000 to 750,000 tonnes this year, Pires said.

"The iron ore will be sold to both Brazilian and foreign (market participants), depending on market opportunities," he said.

The company is not concerned about the lack of port availability to ship its iron ore output in the short term, as it has "contracted port capacity for the next two years," Pires said.

Gerdau has plans to construct a private port terminal in Itaguaí, Rio de Janeiro state, to export its iron ore surplus, but didn’t disclose any details.

Gerdau’s iron ore output capacity will rise to 11.5 million tonnes per year by the end of 2013 from the current 7 million tonnes, of which 7 million to 7.5 million tonnes will be consumed by the company’s Açominas steel works.

A version of this article was first published in AMM sister publication Steel First.

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