By Brazil Stock Guide – In his first interview as chairman of Gerdau’s (GGB) board of directors, André Gerdau Johannpeter raised concerns about a potential slowdown in steel consumption in the second half of 2025. Speaking to Valor Econômico, the executive noted that a drop in demand has already been observed among key industrial clients, including sectors like automotive, machinery, and electronics. Gerdau, which is navigating a turbulent market, faces challenges stemming from both domestic economic pressures and increasing international competition.
Brazil’s economic outlook, including high interest rates and subdued GDP growth, is weighing on local industry. In addition, a surge in steel imports, particularly from China, is intensifying competition against domestic products. “The concern is what comes next. We’re already seeing reduced consumption from some clients in the second half,” Gerdau said.
According to the Institute for Steel of Brazil (Instituto Aço Brasil), crude steel production is projected to fall by 0.8% in 2025. Furthermore, Gerdau faces 35% idle capacity in its Brazilian operations, well above its ideal threshold of 15% to 20%. This high level of idle capacity risks making operations unsustainable. “We’re at a point of near unsustainability,” Gerdau warned.
The increased import pressure is exacerbated by U.S. tariff policies, which benefit American steelmakers, including Gerdau, which operates in the U.S. Gerdau’s internationalization strategy has been successful, with the company seeing stronger performance in North America. “Now, the best results are coming from North America,” Gerdau remarked.
Despite facing challenges in Brazil, Gerdau is prioritizing the Americas for expansion. “Our internationalization was done a long time ago. Our focus is on the Americas,” he emphasized. However, he expressed concern about the trade policies in Brazil and the impact of Chinese steel imports. He also stressed that businesses need certainty to thrive, calling for clearer industrial policies and innovation incentives to navigate the current climate.
As for the steel industry, Gerdau is advocating for stronger measures against the influx of foreign steel, particularly from China, which has seen its market share in Brazil rise significantly. Before the pandemic, steel imports stood at 2.2 million tons, or 10% of the market. Today, they represent 6.3 million tons, or 22%.