Brazilian steelmaker Gerdau expects margins to remain tight in the fourth quarter because of rising volumes of cheaper imported steel.
An additional price increase is necessary to ease margin pressure, but competition from imports is preventing that move for now, chief executive Gustavo Werneck said.
The firm increased hot-rolled coil (HRC) prices by 8pc as of 1 October. A narrow import-domestic spread and rising feedstock costs prompted Brazilian mills to raise prices.
"Several plants have been operating at a loss in Brazil. The domestic steel industry will collapse if the influx of imports remains this strong", Werneck said during a conference call on 31 October.
Werneck expressed confidence that more robust mechanisms will be put in place over the coming months to reverse recent losses.
President Lula da Silva's administration is working to strike a balance between supporting domestic industry and maintaining relations with China, Brazil's top trading partner, he said.
Gerdau expects antidumping duties to level the playing field in Brazil. Chinese HRC is under scrutiny. The antidumping probe includes 25 products, with a ruling expected from April-October 2026. Most of Gerdau's output is long steel, but the company recently invested in expanding its HRC production capacity by 250,000 t/yr. The mill in Ouro Branco began ramping up earlier this year.
The company has since reduced its investment plans in Brazil and laid off more than 1,000 employees in 2025. Persistent cost overruns at several plants have led Gerdau to reduce operating hours, the company said.
The steelmaker operates in North America, Brazil and three other countries in South America. Stronger safeguard measures in the US bumped sales and Gerdau's overall revenue, it said.
Gerdau's quarterly crude steel production increased by 6pc to 3.15mn metric tonnes (t) in the third quarter from a year earlier. Sales across all three regions rose to 3mn t, up from 2.82mn t a year earlier.
Gerdau's crude steel production in Brazil held steady at 1.64mn t, while Brazil sales rose by 8pc to 1.58mn t from a year earlier. Brazil's exports climbed to 330,000t, up by 29.5pc from a year earlier.
Operations in South America, including Argentina, Peru, and Uruguay, produced 164,000t in the quarter, up by 39pc from a year earlier.
Production increased because of the gradual recovery of sales volumes in Argentina and Uruguay, the company said.
Sales in South America rose by 9.6pc to 289,000t from a year prior.
