Credit rating agency Fitch said Brazilian flats steelmaker Usiminas has maintained its stable outlook.
Fitch affirmed the company’s long-term foreign ratings at “BB-.” Fitch said the rating reflects what it labeled as a “positive” iron ore pricing environment during 2020 that should help Usiminas generate a positive free cash flow, despite a sharp decline in flat steel demand due Covid-19.
“The rating affirmations also reflect Usiminas' low absolute and relative debt levels, as well as its manageable debt amortization profile,” Fitch noted.
Fitch estimated Usiminas might generate BRL 1.3 billion ($245 million) in EBITDA and BRL 300 million ($56.5 million) in free cash flow in 2020 if it sells 8.2 million mt of iron ore, assuming average iron ore prices of USD 75/mt.
Earlier this week, an executive from ArcelorMittal Brazil said the local longs steel market was least exposed to the Covid-19 crisis, adding the impact would be stronger in the flats segment.