Gerdau 1Q25 Regional EBITDA/ton Snapshot: North America Leads as Brazil Faces Margin Pressure

EBITDA per Ton – Regional Breakdown (converted to USD for comparison)

(Assuming exchange rate ~5 BRL/USD)

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Key Insights by Region

1. North America

EBITDA/ton surged to ~$195/ton, leading all regions.

Volume up 14.6% QoQ, aided by seasonal demand and improved pricing.

Drivers:

Better product mix and price increases.

Stable scrap costs + better fixed cost dilution.

Positive spread outlook, supported by trade policy shifts and non-resi construction.

2. Brazil

EBITDA/ton fell to ~$147/ton due to:

Scheduled shutdown at Ouro Branco impacting flat steel output.

Price pressure in long steel amid high import penetration (22%) and quota inefficiency.

Domestic demand in civil construction and auto held up, but margins squeezed.

3. South America (ex-Brazil)

EBITDA/ton declined to ~$159/ton, mainly from Argentina and Peru:

Argentina faced order pull-forward in 4Q and weaker demand now.

Prices were pressured by elevated imports.

Costs declined but couldn’t offset lower volumes and price weakness.

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Market Fundamentals & Expectations

Brazil:

Flat steel expected to recover with hot coil expansion now operational.

Challenges:

Fierce import competition.

Rebar prices under pressure.

Outlook: Margins to stabilize but upside capped unless trade barriers are revised.

North America:

Strong market fundamentals:

High backlogs (>70 days).

Supportive pricing environment.

Scrap costs stable.

Risks: Potential volatility from trade policy uncertainty, but overall constructive.

South America (ex-Brazil):

Political and currency risks persist.

Stable project demand in civil works, but pricing remains fragile.

Margin recovery hinges on cost discipline and regional economic stability.