Analysts say idling blast furnace was best option for CSN

Tuesday, 02 June 2020 23:33:35 (GMT+3)   |   Sao Paulo
       

Market analysts said Brazilian steelmaker Companhia Siderurgica Nacional (CSN) made the right move by halting its No. 2 blast furnace with a 1.5 million mt/year capacity. A media report citing analysts from BTG Pactual and Credit Suisse said the halt was already expected, and SteelOrbis reported the move on May 13.

“After Gerdau, Usiminas and ArcelorMittal Brazil announced along the past two months they would idle blast furnaces, it was just a matter of time for CSN to do so,” BTG Pactual analysts Caio Ribeiro and Gabriel Galvão said.

They said CSN’s No. 2 blast furnace costs are 10 percent higher than No. 3 blast furnace. By halting the No. 2 furnace, instead of the No. 3 equipment, CSN will see improved cash flow costs, which should offset weaker steel orders amid the ongoing Covid-19 pandemic.

On the other hand, the halted equipment would also allow CSN to ship more iron ore and take advantage of the commodity’s price.


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