US Section 232 quotas ‘positive’ for Gerdau’s North American division

Latin American steelmaker Gerdau sees the results of the Section 232 investigations of steel imports into the United States as being “positive” for the company, chief executive officer Gustavo Werneck has said.

“From the Gerdau North America perspective, the quotas [imposed by the US government after the conclusion of the process] will contribute to reducing imports and increasing the company’s utilization capacity,” he said on Wednesday May 9.

As a consequence, the Brazil-based steel group expects to raise the utilization capacity of its North American operations to 85% from the current 80%.

At the end of April, the US government announced that it had reached agreements in principle with Argentina, Australia and Brazil with respect to import quotas for steel and aluminium products.

The Section 232 decision will not affect steel exports from Gerdau’s Brazilian operations to the US market because such volumes are “not relevant,” Werneck said.

“Most of the US demand is met by local output from US and Canadian plants,” he added.

But from its Brazilian perspective, Gerdau supports the view voiced by national steel association Aço Brasil, according to Werneck.

The Brazilian steel sector has agreed to the US government’s offer to set quotas for steel shipments into the North American country, and thus avoid the 25% import tariff that resulted from the Section 232 process.

Producers have agreed to limit their exports to 70% of the 2015-17 average for finished steel products and to 100% of the three-year average for semi-finished steel products, although the details of these measure have yet to be defined, according to Aço Brasil.

The US authorities gave Brazil the option of accepting the quota offer or being subject to the full 25% tariff on all steel exports to the country, according to the association.

“They said that the period for the exemption [from the 25% tariff] would not be extended, so it was a ‘take it or leave it’ situation,” Aço Brasil executive president Marco Polo de Mello Lopes said in early May.