Brazilian steelmaker Gerdau has been focusing most of its steel production on the mini-mill output model, according to a media report.
Instead of relying on the integrated-mill system to produce steel, Gerdau is adopting the mini-mill or semi-integrated process as a way to reduce costs and increase the company’s flexibility, a top executive said.
“That’s the great competitive differential [we have], as we can modulate [steel] production, seeking the cheapest [production] rate in the moment, depending on the price of feedstock,” said Andre Gerdau Johannpeter, CEO at Gerdau.
According to Johannpeter, 50 percent of the steel products that are distributed throughout Brazil come from integrated steel mills, while the other half come from semi-integrated mills.
The Gerdau executive also said the decline in steel demand is equal to both long and flat steel. “Our HRC laminator in Ouro Branco [in the state of Minas Gerais] has initiated operations in August 2013 and its production volumes are meeting the expected levels,” the executive said, adding the equipment is production steel of different gauges and quantities.
However, the specialty steel segment faces an even more adverse situation. According to Johannpeter, Gerdau’s specialty capacity is at 60 percent, due to the pessimistic prospects for the Brazilian automotive industry.