Gerdau to repair Ouro Branco furnace in H2, buys plate to keep up inventory levels

Monday, 13 May 2019 00:44:14 (GMT+3)   |   Sao Paulo

Brazilian integrated steelmaker Gerdau will invest BRL 37 million ($9.6 million) to repair its No. 1 blast furnace located its Ouro Branco mill, in the city of same name in Minas Gerais state, top executives told analysts last week during an earnings call.

CFO Harley Scardoelli said the mill’s No. 1 blast furnace maintenance is scheduled for the second half (H2) of the year.

“We rearranged our strategic inventory of products and inputs, mainly iron ore and slabs, aiming at preparing Ouro Branco Mill in Minas Gerais,” the CFO said.

Scardoelli said Gerdau is maintaining an inventory of 350,000 mt of steel plate to help the company cope with market demand during the blast furnace’s scheduled maintenance period.

“Most part of that inventory is being generated through our own production. We are buying 15 percent of that inventory in the domestic market. So that inventory that is produced in-house, we already have a lot of things in stock,” Scardoelli said.

Gerdau’s CEO Gustavo Werneck said the company has already prepared to cope with an eventual lack of pellets.

“In our two blast furnaces of Ouro Branco, we can produce steel without pellets. So if we do not find pellets in the market, we can continue to produce. Pellets can help us to increase productivity. We are now looking at volumes of pellets, logistic costs, productivity of the blast furnace and export prices. We're running a calculation that will allow us to find an appropriate balance for the Ouro Branco mill,” the CEO said, adding pellets aren’t that significant to keep Ouro Branco operations.

“Pellets certainly allow us to increase productivity, especially when we increase the production of the two blast furnaces,” Werneck said.

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