Despite expectations of increased investment in railroads in the country, due to the federal program launched in August last year, which provides for investments of $40.41 billion in the industry, Gerdau – group from the state of Rio Grande do Sul – will not produce rails in Steel Plant Gerdau Ouro Branco, in Central region of the state. According to the CEO of the company André Gerdau Johannpeter, production is impractical.
He said the steel conglomerate evaluates the market from time to time, but today, because of the demanded volume, production would not have economic viability, even with the ambitious federal government’s concession plan. This program does not have the volume and viability for the production of rails, he said yesterday during the Brazilian Mining Congress.
Since 2002, Gerdau has a profile rolling in Ouro Branco, which would facilitate the manufacture of rails in the mining unit. Currently, there is no production of rails in Brazil. In other words: all the material used in the country is imported, mainly from Asian countries. Even with the huge investments expected for the coming years in railroads in Brazil, through the concession plan, experts point out that a rail plant in the country would be unable to compete with imports.
On the other hand, the company has been investing heavily to enter the flat steel segment. This year, the company completed the contributions on a hot rolling mill, with an installed capacity of 770 thousand tons. The CEO of the steel conglomerate estimated that the coils will be ready to be delivered to the clients within two or three weeks. In 2013, the company should sell between 150,000 and 200,000 tons.
To enter the flat steel market, Gerdau’s contributions will total $1.06 billion. Besides the rolling, the steel mill is deploying a line of heavy plates in the city of Ouro Branco, which will come into operation in the next two years.
Competitiveness – For the entrepreneur, continuity in the process of appreciation of the dollar against the real may help give more competitiveness to the domestic steel industry. According to him, the ideal is that the dollar is quoted above R$ 2.30.
He explains that, with the strong dollar, domestic companies can begin to assess exports, as well as they can be able to compete with imports. Moreover, the variation may help to stop the process of deindustrialization recorded in the country.
The chairman of the Board of Directors of Gerdau and of the Chamber of Management and Competitiveness of the federal government, Jorge Gerdau Johannpeter, also pointed out the process of deindustrialization as a challenge for the steel chain. Data presented by him during the conference indicate that the balance of trade of manufactured products of Brazil was $2 billion positive in 2003. This year, it is estimated that the result will be $110 billion negative.
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