Gerdau steel shipments rise, output slips in 2Q

Brazil-based steelmaker Gerdau shipped more steel in the second quarter on strong demand in North America, while production slipped because of the truckers' strike in Brazil.

Gerdau shipped 3.8mn t of steel in the quarter, up by 3pc from the same prior year period. Crude steel production fell by 2.5pc from the prior year to 3.99mn t because of the May truckers' strike that impacted Brazilian operations.

Gerdau's North American operations saw support from strong demand and the 25pc tariff on imported steel put in place by the US in March, which drove a 3pc year-over-year rise in production to 1.8mn t and a 7pc increase in shipments to 1.7mn t in the region. Gerdau's North American volumes dipped slightly from the first quarter of 2018 because of the sale of its former Beaumont, Texas, wire rod mill to Optimus Steel in April.

North American quarterly sales jumped by 39pc to R$5.4bn ($1.4bn) from the prior year, helping double Ebitda (earnings before interest taxes depreciation and amortization) to R$497mn from the prior year to the highest in 10 years.

South American production and shipments dropped from the prior year, reflecting the June 2017 sale of 50pc its Colombian assets. Crude steel production totaled 216,000t in the quarter, down by 23pc from the prior year. Shipments dropped by 13pc to 386,000t.

Still, sales in South American climbed by 15pc to R$1.1bn, driving Ebitda up by 42pc to R$179mn.

Stronger demand from the Brazilian auto sector and US oil and gas industry resulted in higher production and shipments in Gerdau's special steel business. Specialty steel production climbed by 13pc to 637,000t, while shipments increased by 11pc to 569,000t.

Specialty steel sales grew to R$2.1bn, up by 32pc from the prior year, and Ebitda increased by 30pc to R$386mn.

Gerdau maintained its positive outlook for the balance of 2018, despite a "still challenging" civil construction market in Brazil. The producer highlighted a growing US economy, Brazil vehicle production that should surpass 2017 levels and expectations from growing South American economies outside of Brazil as supportive of steel markets.

Gerdau's adjusted profits increased to R$746mn ($198mn) in the second quarter, up from R$147mn during the same period in 2017.