Posted on 05 Aug 2021
Integrated steelmaker Gerdau plans to expand output capacity of hot-rolled-coil by 250,000 mt/year and of structural beams by 500,000 mt/year at its Ouro Branco plant in Minas Gerais state, CEO Gustavo Werneck said Aug. 4.
Both investments could sum around $500 million, Werneck said during Gerdau's second-quarter results call. About $200 million would be allocated to the HRC mill and about $300 million to the profiles equipment, he said.
Werneck said the initial investments in the new facilities are already included in Gerdau's Real 3.5 billion projected budget for 2021.
"If we had already this production capacity, it would be easily embraced by the market," Werneck said. "We are fully capable of distributing this additional volume. We are operating our HRC mill in full steam due to increasing demand. Plate consumption is also increasing and that is why we are using our full capacity."
Traditionally a longs maker, Gerdau launched its production of flat steel in Brazil in 2013 at Ouro Branco after installing a rolling mill to produce hot-rolled coils with an installed production capacity of 800,000 mt/year. Heavy plate production at the plant started in the second half of 2016. The unit has the capacity to produce 1.1 million mt/year of heavy plate.
Both expansions are to be operational in 2024, Werneck said.
Werneck also announced the resumption of operations of a 360,000 mt/year rolling mill at Gerdau Cosigua, in Rio de Janeiro. This plant is equipped with three rolling mills that were out of service for seven years.
Gerdau in July reactivated the steelworks at its plant in Mogi das Cruzes, São Paulo, idle since 2019. The mill will produce 180,000 mt/year of special steel products, in particular for heavy vehicles applications.
Gerdau is also working on bringing to full capacity the recently acquired 600,000 mt/y Silat plant in Caucaia, northern Ceará state.
Werneck stressed all these measures to expand production were necessary due to the strong demand growth in the Brazilian market.
"The performance of civil construction in July positively surprised us," he said. "The number of construction sites rose 5% between June and July, this is very significant. Demand will not decrease over the next quarters."
Gerdau expects its sales volume of flat and long steel in Brazil to grow 20% this year in Brazil over 2020, Werneck said. The projection is above the forecast by the association Aço Brasil, which expects steel shipments in the country this year to rise 18.5%.
Shipments by Gerdau's Brazilian unit fell 7% to 5.21 million mt in 2020.
Source:Platts
