Steel Market Overview and Trends Tampa Steel Conference Guilherme C. Gerdau Johannpeter March 1, 2013
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Who is Gerdau? 14th largest steel company in the world, according to the World Steel Association
112 years of history One of the largest suppliers of special long steel in the world
Leader in long steel production in the Americas
Steel for the civil construction, industrial and agribusiness sectors © Copyright 2009 Gerdau. All Rights Reserved.
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Who is Gerdau? Over 45,000 employees in 14 countries: Argentina, Brazil, Canada, Chile, Colombia, Dominican Republic, Guatemala, India, Mexico, Peru, Spain, United States, Uruguay and Venezuela.
Traded on São Paulo (Bovespa: GGBR4, GGBR3, GOAU4 and GOAU3), New York (NYSE: GGB) and Madrid (Latibex:XGGB) Stock Exchanges.
Current capacity of more than 25 million metric tons of crude steel per year, with US$ 19.5B in consolidated net revenues in 2012.
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Gerdau Long Steel North America Annual manufacturing capacity of over 11 million tons of finished steel products in North America Employs approximately 10,000 people in the United States and Canada at over 120 locations – mills, reinforcing steel fabrication and placement, metallics and raw materials 2012 revenue of Gerdau Long Steel North America is US$6.4B We operate in 29 U.S. states and 2 Canadian provinces
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Gerdau Safety Results 2002 – 2012 Milestone & Historical Events Timeline First Safety Pilot GSRS Launched ISRS Safety Hour Best Practice
Co Steel Purchased (WHI, PAY, SAY)
GBS Guidelines
North Star Steel Purchased (BMT, WIL, CCK, STP, DUL)
Take Ten Critical Risk
Sheffield Purchased (SAN, JOL)
Preliminary Risk Analysis
Chaparral Steel Purchased (MID, PTB) Contractor LTA Added
Truck Drivers LTA Added Tamco Purchased (RAN)
1.6 2012
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Our Business Culture Macroeconomics
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Business Environment – Market
2013 GDP Variation Projected percentage change related 2012
Source: IMF
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Q4 U.S. GDP Year-on-Year
Source: Bureau of Economic Analysis
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2,000,000
8,000,000
1,800,000
7,200,000
1,600,000
6,400,000
1,400,000
5,600,000
1,200,000
4,800,000
1,000,000
4,000,000
800,000
3,200,000
600,000
2,400,000 Bank Reserves- Excess, NSA (4)
400,000
1,600,000
Bank Credit - Loans and Leases
200,000
800,000
0
0
Source: Federal Reserve
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Bank Credit Millions $
Excess reserves Millions $
Commercial Banks Reserves and Credit Outstanding January 2004 through January 2013
SBQ Demand Driver: Automotive Market Total Vehicles Production (North America) 20 18 16 14
12.9 0.4
12 10
15.8 0.4
15.4 0.4
6.4
6.8
8.4
8.6
8.8
7.1
7.2
7.4
17.5 0.5
18.1 0.5
18.3 0.6
18.4 0.6
18.5 0.6
9.2
9.4
9.4
9.5
9.5
9.6
7.8
8.1
8.1
8.2
8.3
8.4
7.4
4.5
6
2
8.7 0.2
16.8 0.5
13.6 0.4
8.5
8
4
12.2 0.3
16.4 0.5
17.9 0.5
6.5
6.2 4.0
5.1
5.7
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Passenger Cars
Light Trucks
Medium / Heavy Trucks
Source: Light Vehicles and Heavy Trucks Average Fleet Age = Polk and Volvo Light Vehicles and Medium / Heavy Trucks Production Data = IHS Automotive and ACT Research
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Jobless Claims and Steel Production 4 week moving averages 3,200 3,000
Through February 2nd
2,800
Tons / Week (4WMA)
2,600
Jobless claims (4WMA)
112,500
2,400
225,000
Tons / week x 1,000
2,000
337,500
1,800 1,600
450,000
1,400 1,200
562,500
1,000 800
675,000
600
Correlation -0.895
400
787,500
200 0
900,000 2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Sources: AISI and BLS
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Claims (reverse scale)
2,200
U.S. Import Market Share Dropped During Crisis Now Gaining Ground Due to Global Overcapacity and Reduced Growth
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China Total Production
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Domestic Competitiveness North America: • Is self-sufficient in steelmaking raw materials, especially scrap • Has high productivity to offset wage rates • Has the world’s largest capital market • Has competitive energy supply • Has a highly-skilled workforce © Copyright 2009 Gerdau. All Rights Reserved.
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US Natural Gas Production 1990-2035
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Our Business Culture Construction Indicators
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Housing Starts Projected to Hit a Million This Year, Growing to Almost 1.3 Million by 2014
Source: AIA
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Institutional Categories Account for Over Half the Spending on Nonresidential Buildings
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Total Infrastructure Expenditures X $1,000,000 and % Change Y on Y. Const 1996 $s NSA thru August 2012
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US Public Works – Highways and Bridges
Source: McGraw Hill Construction
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I-4 Connector in Tampa
Source: Florida Department of Transportation
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Nuclear Projects
Source: Georgia Power Company
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Our Business Culture
What Gerdau is Doing in the Current Economic Environment
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North American Acquisitions and Steel Making Capacity
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Cycle Systems – Moving Upstream
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Calvert City Reheat Furnace
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St. Paul Continuous Caster
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Jacksonville Mill
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Thank you.
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