Gerdau (GGBR4) announced a reduced investment of R $ 4.7 billion in 2026, which is 21.7% lower than the original plan. This adjustment is due to the intense competition from Chinese imported steel, which currently holds almost a quarter of the Brazilian market share and is squeezing the company’s profit margins.
In the initial six months of 2025, the company’s earnings from domestic sales declined by 4%, amounting to R$ 12.5 billion.
The CEO Gustavo Werneck stated that the level of investment in steel is closely connected to the trade protection measures implemented by the Brazilian government.
Werneck stated in an interview in April that if there is no increased protection for the sector, they will reconsider the amount of resources allocated to the country.
Effect of Excessive Chinese Steel Supply
Brazil uses around 4 million tons of vergallion annually, whereas China has a production capacity of 400 million tons thanks to years of infrastructure development.
The surplus has been sent abroad at prices lower than the cost of production due to the recent slowdown in the economy.
The situation is worldwide, as the European Union is considering cutting import quotas in half, the United States already imposes a 50% tariff on foreign steel, and in Brazil, the steel industry is pushing for a reevaluation of the 25% quota-tariff policy deemed ineffective.
Gerdau investments’ future outcomes
Gerdau will allocate R$ 3 billion each year for the next five years, with R$ 2.9 billion earmarked for operations and R$ 1.8 billion set aside for new projects in 2026.
The iron ore mine in Miguel Burnier (MG) has received $4 billion out of the planned $5.2 billion, with the rest to be invested by 2027.
The project is expected to produce an extra Ebitda of R$400 million in 2026, with the aim of achieving R$1.1 billion annually following the initial maturity stage.
Outlook for the Brazilian steel sector
Gerdau acknowledges that the environment is becoming increasingly uncertain due to higher imports of steel, declining local prices, and decreased demand caused by high interest rates.
The company aims to achieve an annual Ebitda of R $ 1.5 billion through ongoing investment projects and focusing on efficiency gains and ore production.
- Actions
- Business operations
- Companies are in the bag.
- Marketplace
- Business operations
- Steel
- China.
- Market companies
- Gerdau is the company with the stock symbol GGBR4.
- Extraction of minerals
