Gerdau had initially hoped to reach a final investment decision by the end of 2024 to begin building the plant this year, but has now postponed the decision until July.
Brazilian steelmaker Gerdau may choose to increase its production capacity in the United States rather than build a new plant in Mexico, its CEO said Thursday, as tariffs imposed by President Donald Trump roil global trade.
Gerdau announced last year that it was considering installing a new specialty steel plant in Mexico, which would have an annual capacity of about 600,000 metric tons and would require an investment of between US$500 and US$600 million.
Gerdau had initially hoped to reach a final investment decision by the end of 2024 to begin building the plant this year, but has now postponed the decision until July.
"We are reviewing all our analyses in light of what is happening," Chief Executive Gustavo Werneck said on an earnings call. "Special steels are a very important segment for us in the Americas."
"We are looking at the possibility of building the mill in two stages, or increasing production capacity in the United States," Werneck said, citing the company's units in Michigan and Arkansas.
Trump earlier this month substantially raised tariffs on U.S. steel and aluminum imports to a flat 25 percent "with no exceptions or exemptions," adding to other tariff threats against key trading partners such as Mexico and Canada.
Gerdau benefits from the tariffs because it operates production units in the United States and had previously touted its presence in the country as a hedge against the risk of Trump's protectionism.
Werneck said the tariffs should lead to a better production mix in the United States and greater profitability.
The firm currently operates at 70% of its US rolling capacity, or about 4 million tonnes per year.
The company, which owns steel mills across the Americas, announced that starting in the first quarter of 2025 it will segment its profits by region: Brazil, North America and South America.
"Gerdau North America should be a clear winner - at least in the short term - following the steel tariffs announced by President Trump," Scotiabank analysts said, although they noted that the Brazilian unit could be negatively affected.
Gerdau's Sao Paulo-listed shares rose 0.7% on Thursday, in line with the broader Bovespa stock index.
