Usiminas Expects Stability In Domestic Steel Demand, But Foresees Increase In Expenses During Third Quarter Of The Year

After Good Results in Domestic Market Revenue in the Second Quarter of 2022, Usiminas Now Expects Continuity in Steel Demand in the National Territory, Although It Forecasts Increases in Expenditures Over the Next Few Months.

The steel and industrial company Usiminas has positive projections for steel demand in the domestic market over the coming months, given that during the second quarter of the year, the results were quite positive for the company. Despite this, the resumption of operations for production in blast furnace 3 will require an increase in expenditures in the next quarter, due to raw materials and other equipment in the structure.

The Second Quarter of 2022 Was Quite Positive for Usiminas and the Company Expects Stability in the Domestic Market Regarding Steel Demand

In a recent interview about the company’s results in recent months, Usiminas’ president, Alberto Ono, highlighted that the year 2022 has been quite positive for the company and that the second quarter of the year, specifically, achieved good financial results in steel sales in Brazil. He also emphasized that the company managed to remain resilient in the domestic market, even with the influences of the international scenario. 

This is because the war between Ukraine and Russia has significantly affected the markets of nations around the world, including Brazil. As such, there was a sharp increase in the prices of inputs, production costs, and other expenses in steel sales in Brazil. However, the second quarter of the year was still very favorable for the company, which now hopes that the numbers will remain stable over the next few months, projecting stability in the domestic market regarding product demand.

The commercial vice president, Miguel Homes, confirmed that Usiminas’ projections regarding demand indicate that steel consumption in Brazil has taken on a more stable posture in recent months. Meanwhile, the vice president of finance, Thiago Rodrigues, stated that the automotive sector is still the company’s main issue in the domestic market, due to the volatility of product consumption, but that the industrial segment is driving the increase in steel demand, along with agribusiness, which has been expanding considerably and generating good results for the steel company. 

Raw Material Expenditures for Resuming Production at Blast Furnace 3 May Affect the Company’s Working Capital, Even with High Steel Demand in the Country

Although the projections for the domestic market regarding steel demand are quite favorable, not everything remains perfect when it comes to the sale of raw materials, and Usiminas now expects an increase in expenditures to resume production at blast furnace 3, as there is a need for investments for that. Additionally, Rodrigues was questioned about the possibility of Usiminas investing in a galvanized steel line, and stated that this is not the company’s current focus, but it may happen.

Meanwhile, Usiminas’ president, Alberto Ono, highlighted the early redemption of the first series of the 7th issuance of debentures, valued at R$ 700 million and maturing in 2023, and stated, “It was an interesting operation because it gave us more time and lower costs,” regarding the results in the Brazilian domestic market. Furthermore, he confirmed that Usiminas paid R$ 2.1 billion in dividends last year. 

Thus, the company will need to keep an eye on the increase in production costs over the course of the third quarter of the year, while taking advantage of the high demand for steel in the national domestic market to balance out operational costs that are increasingly on the rise.