Fitch Ratings upgraded its outlook for Brazilian steel producer Gerdau from stable to positive, based on the company’s potential to improve its business profile and profitability in the short to medium term, supported mainly by a stronger presence in North America and a recovery in its Brazilian operations.
In a statement, Fitch said Gerdau has “a strong business profile, resilient free cash flow (FCF) across cycles, a conservative capital structure and robust liquidity”.
Fitch also noted that Gerdau’s geographic diversification and flexible electric arc furnace (EAF) steel production structure give the company competitive advantages and allow it to respond quickly to changes in market conditions.
In Fitch’s view, Gerdau is expected to benefit from higher U.S. import tariffs, which should support domestic steel prices, as well as from antidumping duties on steel imports in Brazil, which should help stabilize local prices. Prices could rise further if heavy plate and HRC produced by Gerdau in Brazil are included in the antidumping measures adopted by Brazilian authorities.
Gerdau has production facilities in Brazil, Uruguay, Argentina, Peru, Mexico, the US and Canada.
