LatAm Materials 2Q26 Preview: All Eyes on Costs; Favor Steel

Research evidence excerpt

LatAm Materials 2Q26 Preview: All Eyes on Costs; Favor Steel

Global Research

9 July 2026ab

LatAm Materials Equities

Latin America2Q26 Preview: All Eyes on Costs; Favor Steel

Basic Materials

Caio Greiner

Cost focus during the 2Q26; Winners will be the least impacted; Steel > P&P > IO Analyst

The key topic during the 2Q26 earnings season will be the cost headwinds stemming caio.greiner@ubs.com

from the the Middle East conflict; commodities markets have been volatile, with +55-11-2767 6294

cost pressures for most companies under our coverage already materializing during Arthur Biscuola

this Q. Iron ore producers should be the most impacted due to elevated oil/fuel Associate Analyst

exposure at the cost level, with iron ore prices only moving sideways during the arthur.biscuola@ubs.com

period. Pulp makers should also see a good amount of cost inflation (chemicals, +55-11-2767 6963

fuels), but it should be more than offset by higher realized prices. Steel, on the Eduardo Woiciski Freire

other hand, remains the most constructive idiosyncratic story within our coverage; Associate Analyst

in the 2Q, we anticipate higher realized prices to more than offset raw material cost eduardo.woiciski@ubs.com

inflation (coal/coke, slabs, fuels), and also anticipate the companies to guide for +55-11-3701 6466

further margin expansion into the 3Q26. Steel remains our preference within our Myles Allsop

LatAm Materials coverage, and we favor exposure to Usiminas/Gerdau. Analyst

myles.allsop@ubs.com

Vale: We forecast an EBITDA of US$3.8bn, with Ferrous EBITDA at ~US$2.9bn, +44-20-7568 1693

as higher volumes should mostly offset weaker realized prices (-1.4% q/q) &

higher all-in costs (slightly below ~US$65/t) pressured by elevated oil prices.