- Gerdau's strong fourth quarter results should be repeated in the first quarter as strong demand and limited capacity growth support multiyear highs for steel prices in Brazil and the U.S.
- Shareholders are reaping some of the benefits of management's disciplined approach to costs, capex, and capacity in recent years, as the balance sheet is clean and margins are high.
- I'm bullish on Brazil's recovery prospects, but I do expect prices to ease in both Brazil and the U.S. as capacity comes back on line and prices make imports competitive.
- I see Gerdau still offering upside at these levels, but starting new positions in commodity stocks at times of record prices carries above-average risk.
For further details see:
Gerdau Making The Most Of A Recovery Boom In Brazilian Steel