Gerdau may scale back planned investments

Wednesday, 22 June 2005 18:17:00 (GMT+3)   |  
       

Gerdau may scale back planned investments

A turbulent steel market has Brazilian steelmaker Gerdau rethinking its short term investment plans. With steel demand waning and the Brazilian government in the midst of allegation of corruption, now may not be the time to move forward full steam. The company is being close-lipped about what, if any, projects it may table but has said it has no intentions of halting work on some of its more highly publicized project like the new mill construction in São Paulo. Still, the company is adopting a wait-and-see attitude on some of its lesser known and smaller projects and it is resigned to observe how the political climate plays out through the current scandal now plaguing Luiz Inacio Lula da Silva’s presidency. For his part, President Lula has struck an indignant pose and despite mounting evidence against him and signs showing support among voters is fading, it appears the scandal is far from over. In the meantime, with the Brazilian government offering tax breaks up to 80% on exports, Gerdau will have to look to that as a means to offset flagging domestic sales even as a robust Brazilian currency eats into profits. Gerdau is the largest producer of longs in the Americas.

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