Brazilian steelmaker Gerdau plans to discontinue iron ore exports in 2015, the company’s chief financial officer told analysts and local media Tuesday.
Spot prices for iron ore are diminishing the company’s export margins close to zero, Andre Pires, CFO at Gerdau said, adding that most of 2014’s capex of $481 million that was aimed to iron ore production was applied for self-sufficiency.
"As the company hadn't yet expanded production to 18 million mt/year, it is in a comfortable situation regarding ore production for own consumption," Pires said.
Lower spot iron ore prices made Gerdau to revise its production as well as expansion plans. According to media reports, the company had first planned to reach a output of 24 million mt/year by 2020, from 7 million mt/year production in 2012. It expanded to 11.5 million mt in 2013, and the next planned step would have it reach about 18 million mt in 2016.
Before 2012, the company bought ore from third parties to supply its steel operations.
Gerdau’s CEO, Andre Bier Gerdau Johannpeter, said the company has "some [supply]commitments to meet during the fourth quarter.
Sales of iron ore in the third quarter of 2014 reached 2 million mt, an 85 percent increase over the same period of last year. Out this total, 1.3 million mt was directed to Gerdau's mills and 692,000 metric tons to export market.