Gerdau predicts “difficult year” for Brazil’s civil construction demand

Brazilian steelmaker Gerdau expects a “difficult year” for civil construction demand, the company’s CEO told local media.

“It will depend a lot on the situation of [civil] construction companies, as well as the on-going [investigations] of Lava-Jato and Petrobras,” said Andre Johannpeter of Gerdau.

The Lava Jato or "Car wash operation" is being conducted by the nation’s Federal Police, which has led to charges of money laundering and organized crime. Some of the nation’s biggest construction firms are being investigated by the operation.

The scenario requires “caution”, the executive said, adding that 12 and 15 percent of Gerdau’s sales are destined to infrastructure projects.

According to Johannpeter, about 40 percent of wire rod sales, as well as other steel used in the civil construction segment, come from minor consumers who generally expand or reform residential properties. The remaining 45 percent sales share come from real estate, commercial and industrial segments.