Gerdau falls on weak outlook for long steel demand
Saturday, 26 Sep 2009
Bloomberg reported that Gerdau SA fell to the lowest in a week on concern about the outlook for long steel demand. As per report, Gerdau declined by 1.8% to BRR 23.63 in Sao Paulo trading and traded as low as BRR 23.45, the lowest intraday price since September 17th 2009.
National Association of Realtors said that sales of existing US homes unexpectedly fell in August for the first time in four months, signaling the housing recovery will be slow to gain speed. Purchases dropped by 2.7% to a 5.1 million annual rate.
Mr Pedro Galdi analyst at SLW Corretora in Sao Paulo said that "The housing data contributed to Gerdau’s drop. Even though Gerdau doesn't have a big stake in housing in the US, it ends up having an effect on the producer of long steel used in infrastructure and commercial construction projects. Market dynamics means Gerdau won't be able to raise prices. The recovery in long steel is difficult."
Gerdau Ameristeel Corporation was cut to underperform on September 22nd 2009 by Bank of America Corporation analyst Mr Kuni Chen, who wrote that the company is a pure play in long products and is highly leveraged to late cycle construction trends. He said that "In an economic recovery, we prefer flat products producers versus long products."
