Gerdau Strong Foundations, Clear Next Steps

研报英文原文证据摘录

Gerdau Strong Foundations, Clear Next Steps

Rodolfo Angele, CFA AC Latin America Equity Research

(55-11) 4950-3888 24 June 2026 J P M O R G A N

rodolfo.r.angele@jpmorgan.com

• Brazil: inflection underway. After several challenging years in which the steel industry

was pressured by elevated imports and domestic volumes, the sector is beginning to show

signs of an inflection. Gerdau is no exception. In a recent conversation, Gerdau’s

management reinforced its confidence that the most challenging period has now passed

and that margins should improve. Management also pointed to declining imports, a

shifting pattern of global trade flows, including how Chinese steel is being repositioned,

tighter inventories throughout the chain, and a less attractive risk reward proposition for

importers, dynamics further amplified by freight conditions. On demand, we continue to

see resilience in construction, supported by credit conditions, and steadier trends in

machinery and equipment and energy-linked demand, while acknowledging that some

industrial long segments remain uneven. The practical takeaway is that Brazil does not

need a broad-based demand surge to recover; it needs less bad conditions plus a more

rational supply and import backdrop to restore price-cost discipline. Despite the positive

signs, we continue to be conservative in our estimates with a flattish margin in Brazil y/y,

while we expect improvements by 2027.

• Cost initiatives and self-help in Brazil. Brazil’s upside is not only a “macro and pricing”

story. In our Commodities conference (here), management has outlined multiple

execution levers that, in the aggregate, should improve the through-cycle cost curve and

expand the range of defensible margins in a normalized environment. The cost narrative