Form 20-F - Gerdau

management skills rather than capital. Gerdau Açominas is currently the third largest crude steel producer in Brazil,
accordingly to the IBS (Brazilian Steel Institute).
Outside Brazil, and notably in North America, Gerdau Ameristeel has increased its market share by
acquiring mills which, like their Brazilian counterparts, required administrative adjustments rather than capital.
Gerdau has progressively increased its share of the North American market and is currently the second largest North
American long steel producer with nominal capacities of 5.9 million tons of crude steel per year and 5.5 million tons
of rolled products per year, according to Company statistics. Gerdau’s industrial units are distributed across North
America to supply local markets along the East Coast of the United States. and the East and Center of Canada.
Following the merger with Co-Steel, completed in October 2002, Gerdau Ameristeel has 10 long steel units.
Gerdau also owns three mills in Argentina, Uruguay and Chile. Of these, the Argentine mill is a joint
venture that does not produce crude steel, in which Gerdau holds a minority stake. The other two mills in Chile and
Uruguay have a combined output of 510,000 tons of crude steel per year. Although these units make only a minor
contribution to consolidated results, they are highly profitable and efficient.
Main Categories of Products
Gerdau provides its customers with a wide range of products within the following major lines:
Slabs, blooms and billets
Products such as billets, blooms and slabs have relatively low added value. Billets are Gerdau Açominas’
main products, with blooms and slabs produced in smaller quantities.
Billets: Billets are square section, long steel bars which serve as inputs for the production of wire rod, rebars,
merchant bars, shapes, etc.
Blooms: Blooms, which are also square in shape, are wider but shorter than billets, and are used to
manufacture products such as springs, forged parts, shapes and seamless tubes.
Slabs: Slabs are short, narrow bars, similar to billets in length that are used to produce hot and cold coils,
heavy slabs, profiling and oxy-cutting, etc.
These products may be cast using different processes, such as continuous casting, mechanical
cutting or oxy-cutting, or may be cooled in molds using a conventional casting system that employs cooling
beds. Although this conventional system is not widely used in Brazil, it is still employed at Gerdau
Açominas’ Ouro Branco mill. This may represent a competitive advantage, since Gerdau Açominas is the
only company manufacturing these products and thus has captive customers.
Common long rolled products
Rolled products represent a major portion of Gerdau’s production. In 2003, common steel rolled products
accounted for 66.4% of the Group’s consolidated sales (41.5% by non-Brazilian companies and the remaining 24.9%
by Gerdau Açominas, with 16.0% going to the domestic market and 8.9% to exports). The main rolled products
include rebars, merchant bars and profiles.
Drawn products
Drawn items represent higher added value products with higher margins. Drawn products include barbed and
barbless fence wires, galvanized wires, fences, concrete reinforcing wire mesh, nails and clamps. Drawn products
account for 5.8% of the Company's consolidated sales. These products are not exported and are usually sold to the
industrial, civil construction and agricultural sectors.
Specialty steel
Specialty or high-alloy steel requires advanced manufacturing processes and normally includes some degree
of customization. Gerdau produces specialty and stainless steel used in tools and machinery (e.g. cold, hot and highspeed
steels), chains, fasteners, railroad spikes and special coil steel at its Gerdau Aços Finos Piratini plant.
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