Brazilian Mill Expected to Restart

Improved long steel demand in the last 90 days has led Brazil's Gerdau to consider jumpstarting plans to build a factory in Sao Paulo state.

Ribeira was unable to confirm a report quoting the group's president Jorge Gerdau Johannpeter that a decision to start construction of the plant had been made, or if there is just renewed interest in the project due to more favorable market conditions.

"The projects are ready and the capacity to carry them out is quick," Johannpeter was quoted as saying in business daily Valor Economico.

The long steel mill, the first in the southeast state of Sao Paulo, would produce up to 1.1 million tons per year and cost $222 million. Gerdau started the project in 2001 but shelved it due to government-imposed energy rationing in 2001 and a fall in demand for long steel.

Construction will be completed in two stages, with the first providing a productive capacity of 500,000 tons per year of concrete reinforcing bars and the second set to take two years and double installed capacity.

Roberto Reis, a steel analyst at investment bank Sudermeris, told BNamericas that low demand forced Gerdau to turn off one of its two ovens at its Cosigua plant in Rio de Janeiro.

"I believe the plan to go ahead with the new mill is good if the demand is really growing," he said. "The plant's location in Sao Paulo near big supplies of scrap metal and close to large clients is also a smart move."