How Does Gerdau (Cosigua) Company Work?

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How does Gerdau (Cosigua) drive steel production and margins?

Gerdau has become the Americas' top long-steel producer, with 2024 net sales in the high tens of billions of reais and shipments in the low-teens of millions of tonnes. Its electric arc furnace mill Cosigua in Rio de Janeiro, scrap-based route, and diversified footprint support resilient utilization and defensible margins.

Gerdau creates value through cost-efficient EAF operations, a large recycling platform, market-focused distribution, and a growing bioenergy portfolio—key for investors tracking cash generation and customers assessing supply and sustainability. Read the Gerdau (Cosigua) Porter's Five Forces Analysis.

Gerdau’s Cosigua complex produces long steel—rebar, wire rod and merchant bars—using electric arc furnaces (EAF) that melt scrap and direct reduced iron into billets, with integrated rolling, finishing and regional distribution focused on Brazil’s Southeast corridor.

Primary production footprint

Cosigua is a flagship long-steel mill serving Rio de Janeiro and São Paulo, prioritizing construction grades and short lead times through nearby demand.

Steelmaking route

The plant uses EAFs with continuous casting, converting scrap and DRI into billets that are hot-rolled into rebar, wire rod and merchant bars.

Integrated logistics

Coastal and rail access plus regional service centers enable cut-to-length, JIT delivery and lower freight for large contractors and fabricators.

Value-added assets

Cosigua benefits from captive forestry-charcoal and bioenergy in Brazil, and specialty mills for automotive and machinery segments.

Operational model integrates continent-wide scrap sourcing, EAF steelmaking, continuous casting, hot rolling, downstream finishing and a multi-channel go-to-market strategy including distributors, direct accounts and digital sales.

Competitive advantages and partnerships

Gerdau’s Americas focus and above-average scrap intensity yield lower carbon intensity and working capital versus blast-furnace peers, supporting flexible production and faster heat-up times.

• Large recycling network supplies scrap across Latin America and Brazil; EAFs typically reduce CO2 intensity by up to ~60% vs BF-BOF on comparable scopes in many studies.
• Long-term agreements with scrap suppliers and cement makers using slag create circularity and stable input flows.
• Logistics optimized by coastal terminals, rail links and regional service centers cut freight and lead times for Southeast projects.
• Gerdau Next ventures in energy, real estate and digital services generate pull-through demand and client solutions; see related market context in Target Market of Gerdau (Cosigua)

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Revenue at Gerdau Cosigua is led by steel product sales—primarily long products (rebar, wire rod, merchant bars) and specialty steels—supplemented by recycling, by‑products, downstream services, and energy generation, with Brazil and North America accounting for roughly 75–85% of consolidated revenue in recent years.

Core product sales

Long steel (rebar, wire rod, merchant bars) is the largest revenue engine, with specialty steels sold into automotive and capital goods.

Price drivers

Average realized prices track global scrap, billet and rebar benchmarks, adjusted by regional premiums and mix, influencing revenue per tonne.

Recycling & by‑products

Processed ferrous scrap sold internally and externally, plus slag, mill scale and aggregates, provide single‑digit revenue but meaningful margin offsets.

Value‑added services

Cutting, bending, fabrication and logistics services, plus digital marketplace fees (e.g., Juntos Somos Mais), deliver higher unit margins and cross‑sell opportunities.

Energy & bioenergy

Biomass and self‑generation reduce purchased energy costs; occasional surplus sales to the grid in Brazil improve EBITDA through cost avoidance.

Regional mix impact

North America is a significant EBITDA contributor due to stable construction demand; Brazil’s long steel benefits from housing and infrastructure programs.

Recent trends show 2022 peak pricing normalized through 2023–2024, compressing revenue per tonne; management has shifted mix toward specialty grades and value‑added services and emphasized cross‑selling and tiered offerings to defend spreads. For context on competitive positioning and market share, see Competitors Landscape of Gerdau (Cosigua).

Revenue composition & metrics (indicative)

Key metrics and monetization levers that shape revenue and margins:

• Geographic revenue concentration: 75–85% from Brazil + North America (2023–2024).
• Product mix: long steel represents a material share of volumes in Brazil; specialty steels form a meaningful minority linked to auto/capital goods cycles.
• By‑product/recycling: typically low‑single‑digit percent of revenue but reduces raw material costs via scrap sourcing and by‑product credits.
• Services & digital fees: low‑ to mid‑single‑digit revenue share with higher margins and cross‑sell potential.

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Key milestones, strategic moves, and competitive edge for Gerdau Cosigua center on capacity modernization, circular-economy scale-up, portfolio diversification through Gerdau Next, and resilience during 2023–2024 market stress—underpinned by a large EAF footprint and lower carbon intensity that support cost leadership and sustainability-linked financing.

Capacity & Modernization

Ongoing debottlenecking and rolling upgrades across Brazilian long-steel mills, including reliability and productivity projects at Cosigua, aim to boost yields and energy efficiency and raise effective long-rod output.

Circular-economy Scale-up

Expansion of scrap collection and processing nodes in Brazil and the U.S. increased metallic self-sufficiency; scrap now supplies the majority of metallic inputs, improving working-capital turns and lowering costs.

Portfolio Diversification

Gerdau Next has grown into energy, real estate, digital and industrial solutions, creating adjacencies and services that reinforce steel demand and customer stickiness while opening new revenue streams.

Resilience Through Cycles

During 2023–2024 import pressure and softer prices were managed by flexing EAF output, prioritizing higher-margin segments, and leveraging regional distribution relationships to protect margins.

Competitive edge is driven by scale, scrap integration, proximity to end markets, and lower CO2 intensity versus blast-furnace peers, supporting preferred-supplier status for ESG-focused buyers and access to sustainability-linked financing like the facilities tied to emissions targets.

Operational Highlights & Competitive Advantages

Key facts and tactical moves that define how Gerdau Cosigua operates and competes across the Americas.

• Electric-arc furnace (EAF) leadership: large-scale EAF footprint in the Americas enables flexible production and rapid response to regional demand shifts.
• Cost leadership via scrap: increased scrap collection makes metallics self-sufficient; scrap supplies the majority of feedstock, reducing exposure to iron ore volatility.
• Lower carbon intensity: reported operational CO2 intensity is materially below the global steel average, aiding sustainability-linked financing and ESG procurement.
• Digital and product upgrades: investments in automation, advanced process control, and higher-spec wire rod/special bars improve margins and market positioning.

Financial and operational figures: in 2024 regional EAF utilization flexibility supported margin protection amid weaker global prices; scrap integration lifted working-capital turns and reduced purchased metallics by a majority share. Read more on corporate direction in Mission, Vision & Core Values of Gerdau (Cosigua).

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Gerdau (Cosigua) is a top-three long-steel producer in the Americas by capacity and shipments, anchoring Southeast Brazil construction demand through Cosigua while maintaining broad North American coverage. Its customer loyalty stems from distribution partnerships, service levels, and consistent product quality, supporting stable volumes and pricing power.

Industry position

Gerdau ranks among the top three long-steel producers in the Americas by capacity and shipments, with Cosigua pivotal in Southeast Brazil. The company’s EAF-based footprint supports competitive cost structures and circular-economy sourcing of scrap.

Market presence

Strong brand recognition in Brazil and a broad North American distribution network underpin market share. Customer retention is driven by distribution partnerships, service levels, and product consistency, especially in rebar and long-steel segments.

Key strengths

Electric-arc-furnace (EAF) steelmaking and scrap integration reduce carbon intensity and lower some input-cost volatility versus integrated blast-furnace peers. Cosigua secures regional logistics advantage in the Southeast construction corridor.

Customer focus

Service levels, inventory management, and local processing capabilities enable higher-value offerings and repeat business in construction and industrial channels.

Key risks include import surges from low-cost Asian producers, scrap-price volatility, energy-cost spikes, and exchange-rate swings that affect BRL-denominated costs versus USD benchmarks. Regulatory shifts—carbon pricing, border adjustments—and permitting or environmental compliance needs add capex pressure despite EAF advantages.

Risks in detail

Operational and market risks that could affect volumes, margins, and cash flow.

• Import competition: surges from low-cost Asian mills can depress domestic long-steel prices and utilization.
• Input volatility: scrap price swings; 2024-2025 scrap market showed double-digit monthly volatility episodes in Brazil and the U.S.
• Energy exposure: grid prices and peak-demand charges; on-site self-generation and bioenergy capex mitigate but do not eliminate cost spikes.
• Regulatory and carbon policy: potential carbon border adjustments and pricing could raise costs or shift competitiveness.
• Technology risk: alternative materials and new steelmaking routes may alter long-term cost curves and demand for traditional rebar/long products.
• Project delays: slower housing or infrastructure rollouts reduce near-term demand and utilization.

Outlook: management emphasizes disciplined capex focused on productivity, energy efficiency, and higher-value product mix plus circular-economy integration to stabilize metallics costs. Expect gradual monetization toward processing and services while sustaining core long-steel volumes; Cosigua remains central to Southeast Brazil pricing and cash generation.

Strategic priorities

Capex prioritized for energy efficiency and product upgrading, deeper scrap sourcing integration, and selective specialty-steel growth to improve margins and resilience.

Demand drivers

Brazilian housing/infrastructure programs and U.S. non-residential construction support medium-term demand; Cosigua’s regional role preserves market access and logistics efficiency.

Financial and operational signals

Recent metrics and actions to watch for investors and analysts.

• Capex discipline: guidance in 2024–2025 emphasized maintenance and productivity over expansion; monitor announced spend vs. depreciation.
• Product mix: shift toward value-added processing and specialty steels to lift EBITDA margins and earnings quality.
• Energy strategy: increased bioenergy and self-generation projects to reduce exposure to grid price volatility.
• Volume resilience: Cosigua’s role in Southeast Brazil supports utilization and local pricing power through construction cycles.

For deeper analysis of strategy, operations, and marketing positioning see this article: Marketing Strategy of Gerdau (Cosigua)

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