North America profits cover a bruised Brazil
- North America is the profit anchor, generating 75 percent of consolidated earnings early in 2026.
- Brazil remains the weak spot due to intense import pressure and melt shop use below 60 percent.
- The Miguel Burnier iron ore mine is testing equipment and aims for a late 2026 start to lower costs.
- Gerdau achieved over 50 percent energy self-sufficiency in Brazil to capture tax benefits and reduce expenses.
- The stock screens better on valuation than on clear growth, fitting a cyclical company with real risks.
A split steel story
The bull case is clear. North America is carrying Gerdau. Demand from non-residential construction, especially data centers, and renewable energy is helping shipments. Management points to a roughly 90-day backlog and strong growth in downstream products, which are more finished steel products sold closer to the end customer. In early 2026, North America made up 75 percent of the company's core earnings.
The bear case sits in Brazil. Imported steel hit a record in 2025, and Gerdau said melt shop use fell below 60 percent. That matters because steel mills need high use to spread fixed costs. Low use led to massive impairment charges on idle or weaker assets in recent periods.
Two things could change the story. Brazil may still get stronger trade defense on hot-rolled coil, which is flat steel used in industry. Gerdau is also testing equipment at the Miguel Burnier mining project for a late 2026 start. This mine is expected to generate 1.1 billion Brazilian reals annually and structurally lower raw material costs at the Ouro Branco mill.
The open question is whether North America can keep offsetting Brazil. US tariffs rose to 50 percent in June 2025. This helps protect local US steel pricing but can hurt Brazilian semi-finished exports to the US.
Scrap, mines, and mill use
Gerdau makes money by buying raw materials, melting or rolling steel, and selling steel products into construction, industry, autos, energy, and infrastructure. Its main products are long steels like rebar and merchant bars, flat steels like hot-rolled coil, and special steels.
In North America, a key cost edge is using obsolete scrap instead of prime scrap. Obsolete scrap is older recycled metal, such as material from demolished buildings or old equipment. That protects Gerdau when prime scrap prices jump.
In Brazil, Gerdau is highly integrated. It is investing in captive iron ore through the Miguel Burnier project to support the Ouro Branco mill. It is also investing heavily in energy, recently surpassing 50 percent self-generation in Brazil. This helps lower utility costs and captures local tax benefits.
The weak point is volume. If imports keep taking share in Brazil, Gerdau either runs plants at low use or sells at worse prices. That is why the company reduced global spending, pivoted away from expansion in Mexico, and focused its budget on cost-saving projects like the local mine.
What Gerdau sells
Long steels
This includes rebar, merchant bars, and structural profiles. Rebar is highly exposed to imports in Brazil, so Gerdau is defending market share while shifting the mix.
Flat steels
Hot-rolled coil is a larger focus after the Ouro Branco expansion opened. Better trade defense in Brazil would help this product line.
Special steels
These steels serve specific uses, including automotive and industrial markets. Demand swings with vehicle and industrial production.
Downstream products
These are higher value-added products such as thermal treatment and solar piles. Management highlights strong North American growth for these lines.
Iron ore for internal use
The Miguel Burnier mine secures raw material for Ouro Branco. Testing is underway for a late 2026 ramp to improve local costs.
North America leads sales
Segment shares use 2025 net sales from the 2025 Form 20-F. The three reported geographic segments reflect the most recent formal disclosure.
What could break the thesis
Brazil imports stay too high
High impact · High oddsBrazilian steel imports reached a record in 2025. Gerdau says the quota tariff system has loopholes, meaning imports still pressure prices and plant use. If melt shop use stays below 60 percent, earnings will remain weak even if demand holds up.
Coal costs squeeze Ouro Branco
Medium impact · Medium oddsAbout 20 percent of the Brazilian cost base tied to Ouro Branco is exposed to coal. Rising coal costs can hit margins before the new mine completely helps the cost base. This is a near-term risk to profit in the region.
US tariffs hurt Brazilian exports
Medium impact · Medium oddsUS Section 232 tariffs were raised to 50 percent in June 2025. That supports US domestic steel pricing, but makes Brazilian semi-finished exports to the US much harder. This creates a push and pull inside the company.
North America demand cools
High impact · Medium oddsThe bull case depends on North America staying strong. Data centers and renewable energy help, but industrial demand can soften and merchant prices can fall. If the backlog shrinks, the company loses its main offset to weakness in Brazil.
The real weakens against the dollar
Medium impact · Medium oddsSome Brazil costs are tied to the US dollar. A weaker Brazilian real can raise costs and make margin recovery harder. It helps exports, but that may not be enough if local prices stay under pressure.
In one breath
What does Gerdau do?
Gerdau makes steel products used in construction, industry, energy, autos, and infrastructure. Its main products are long steels, flat steels, special steels, and higher value-added downstream products.
Why is North America so important for Gerdau?
North America is currently the strongest segment by earnings. Demand from data centers, renewable energy, and non-residential construction is offsetting the weaker Brazil business.
What is the Miguel Burnier project?
Miguel Burnier is Gerdau's captive mining project in Brazil. It is expected to ramp in late 2026 and should help lower raw material costs for the Ouro Branco mill.
What is the biggest risk for GGB stock?
The biggest risk is that Brazil stays weak for longer because imports keep pressuring prices and plant use. A second major risk is that North America cools before Brazil recovers.
Sources and research notes
This page combines Finn's company research with public filings and other cited materials. The thesis is reviewed when material company information changes; Finn Scores use the latest available scoring data.
- Thesis reviewed
- August 30, 2026
- Score data
- September 27, 2026
- Reviewed by
- Shivam Bharuka
Comparable Steel companies
Companies near Gerdau S.A. in Finn's Steel industry ranking.
