Usiminas, a major player on Brazil’s Ibovespa stock index, saw a sharp 10% drop in its shares after releasing first-quarter results for 2024.
Located in Belo Horizonte, Brazil, the group is a pivotal steel producer in Latin America, significantly influencing the region’s economic landscape.
Despite showing strengths in its steel division due to cost efficiencies, broader market issues, especially in mining, overshadowed these gains.
The company’s iron ore segment struggled, with prices and volumes down significantly.
Analysts noted a 75% decrease in EBITDA from the previous quarter for this sector, largely because iron ore prices fell by 25%.
This decline was exacerbated by the sale of lower quality products and challenging pricing mechanisms.
The steel division managed to keep domestic volumes and prices stable and even boosted exports to 123,000 tons.
However, this did not meet investor expectations, who hoped for signs of robust growth.
The forecast for the next quarter does not promise improvement, reflecting worries about stiff import competition.
Looking ahead, Usiminas anticipates a moderate rise in steel production costs per ton due to a stronger dollar and a shift to higher-value product mixes.
The forecast for the steel sector remains stable, but the mining division is not expected to grow.
This situation illustrates the challenges Usiminas faces in aligning its operations with global market dynamics.
The company’s ability to handle these challenges is vital for keeping investor trust.
Achieving financial stability in a fluctuating and competitive international commodity market is essential.
Recognizing these links shows the influence of local operations on regional growth. This influence extends to global markets, shaping investor views and financial results.