Brazil-based Gerdau SA, the largest steelmaker in Latin America, reported constrained earnings in Q2 Thursday as higher prices for iron ore, coal and ferrous scrap were not in line with steel prices. Q2 net profit was R$503 million (US$322 million), down 41 percent from R$856 million (US$542 million) in Q2 2010.
Revenues were up 9 percent to R$9 billion (US$5.7 billion) and sales volumes increased 12 percent to 4.9 million metric tons. Even so, higher sales were not enough to offset raw material costs, which led margins to shrink 24 percent in Q2.
Gerdau also said that its Brazilian mill increased semi-finished steel exports to Asia, and demand from industrial and energy sectors bumped up order US-mill order books. Strength in the US automotive sector also drove demand for specialty steel in the quarter. However, with the exception of Texas, demand for steel used in infrastructure and construction remained tepid.