Goldman Lifts Brazil’s Usiminas to Buy as Steel Cycle Turns

Brazil · Steel & Mining

The reversal at Goldman is unusually sharp because the bank had downgraded the same name to Neutral less than a year ago, citing the structural drag from Chinese steel exports that has now begun to ease.

What changed in the Brazil Usiminas steel call?

The Rio Times, the Latin American financial news outlet, reports that the Brazil Usiminas steel upgrade reflects a shift in Goldman Sachs’ read on the domestic supply-demand balance after two years in which Asian import volumes capped the pricing power of Brazilian producers. The bank’s analysts argue the import-parity premium has now compressed enough that domestic mills can pass through cost inflation, with two price adjustments already implemented this year and a third anticipated in the second half. The model implications are large because Usiminas operates with high operating leverage: roughly 70 percent of its earnings before interest, taxes, depreciation and amortization comes from Brazilian steel.

The numerical revisions are substantial. Goldman lifted its earnings before interest, taxes, depreciation and amortization estimates by up to 70 percent for the next two years and now projects company-level growth of 49 to 107 percent across 2026 and 2027 versus 2025, a range that sits 13 to 30 percent above the consensus published in the Bloomberg analyst aggregate. The Buy rating comes with a R$10.50 ($1.88) twelve-month price target, lifted from R$6.60 ($1.18) at the prior Neutral rating.

Why has the Brazilian steel cycle turned?

Three forces are driving the inflection. First, the Brazilian government’s import-tariff increases from 2024, combined with quotas set at 130 percent of pre-pandemic average volumes, have constrained the volume of subsidized imports reaching the domestic market and structurally compressed the import-parity premium that Brazilian mills face; second, Chinese steel export growth, while still elevated, has begun to redirect into Asia and Africa rather than Latin America, partly in response to the United States tariff posture that has reshaped global trade flows for the metal. Third, infrastructure and automotive demand in Brazil has recovered modestly from the 2024 trough, even as construction remains soft, providing volume support for flat-steel producers.

For Usiminas specifically, the relative position improves because the company’s product mix skews heavily toward flat steel used in automotive stamping, machinery, and consumer durables, segments where Chinese substitution had been most aggressive. Gerdau, by comparison, generates a meaningful share of earnings from long-steel operations in North America, and Companhia Siderúrgica Nacional has a larger international diversification. The Goldman thesis is that Usiminas captures the Brazilian-cycle upside without offsetting drag from external markets, an asymmetry that justifies the multiple expansion the upgraded target implies.

How does the upgrade fit the broader Latin American steel narrative?

The Usiminas call lands in the context of a broader Latin American steel-and-mining repositioning. Vale and Companhia Siderúrgica Nacional Mineração have benefited from iron-ore prices that have held above $100 per tonne for most of 2026, supporting the upstream economics that ultimately flow through to the integrated steelmakers. Chile’s Codelco audit scandal and the broader copper-market tightening have sharpened investor focus on Latin American metals producers as a category, with capital flows rotating into the regional names from emerging-market index funds.

The Ibovespa has lifted alongside, having broken into new all-time-high territory earlier in 2026 with Petrobras, Vale, Itaú Unibanco and Bradesco doing the heavy lifting. Usiminas itself has been a beneficiary of the rotation, with the 60.7 percent year-to-date and 76 percent twelve-month moves placing it among the strongest performers in the index even before Thursday’s upgrade. The Goldman call effectively asks whether the rally has more to give, and the bank’s answer is yes, by another 8 to 10 percent at the new target relative to Thursday’s price.

What are the risks to the Buy thesis?

Three risks sit on the downside. First, the Selic remains elevated at levels that will eventually translate into slower domestic construction and machinery demand, and a sharper-than-expected slowdown would erode the volume side of the Goldman thesis even if pricing holds; second, Chinese export volumes are unpredictable, and a renewed surge of subsidized steel into Latin America would test the import-tariff and quota framework that has supported domestic prices to date. Third, Usiminas remains a structurally high-capex business with ongoing blast-furnace renovation cycles that consume cash and that have historically introduced execution risk into earnings forecasts.

There is also the question of how much of the upgrade is already priced. With the shares already up 60.7 percent year-to-date and trading at R$9.68 ($1.73), the gap to the new R$10.50 ($1.88) target is roughly 8.5 percent, modest by the standards of conviction Buy calls on emerging-market industrial names. Investors who held the stock through the rally are now weighing whether to take profits ahead of a likely Brazilian rate-cut path that would benefit other Ibovespa sectors more directly than the steelmakers.

What should investors and analysts watch next?

• Q2 price adjustment: Whether Usiminas implements the third price adjustment Goldman expects in the second half, and whether automotive and machinery customers absorb it without volume drop.
• Chinese export data: Monthly Chinese flat-steel export numbers and the regional split, as a leading indicator for Latin American import pressure.
• Peer reactions: Whether other sell-side analysts follow Goldman to Buy on Usiminas, with Itaú Banco de Investimentos and Bank of America the next likely candidates given prior coverage history.
• Q2 results: Usiminas’ second-quarter print, which will be the first to embed the two completed price adjustments and provide the earnings before interest, taxes, depreciation and amortization trajectory needed to validate the Goldman model.
• Selic path: Brazilian central bank decisions and signaling, as the rate trajectory determines both the cost of Usiminas’ refinancing and the broader Ibovespa sector rotation that affects the share price.
• Ternium signaling: Any commentary from the Ternium controlling group about capital allocation between its Mexican and Brazilian operations, which could affect Usiminas’ investment pace.

Frequently Asked Questions

Who controls Usiminas?

Usiminas is co-controlled by the Techint group of Italy and Argentina, through its steel arm Ternium, and by Nippon Steel of Japan, in a shared-management structure in place since November 2011. The Brazilian Pension Fund of Banco do Brasil employees also holds a meaningful minority position, and the preferred shares trade freely on the B3 stock exchange.

What does the company actually sell?

Usiminas produces approximately 9.5 million tonnes of crude steel per year at full installed capacity, primarily flat steel used in automotive, machinery, white goods and construction. The company also owns iron-ore mining operations, giving it integrated exposure across the steel value chain, and operates logistics assets through a stake in a domestic rail operator.

Is this upgrade unusual for Goldman?

Yes. Goldman analyst Marcio Farid downgraded Usiminas to Neutral from Buy in 2025 with a R$5.20 ($0.93) price target, citing structural headwinds from elevated Chinese steel exports. The Thursday upgrade reverses that call within roughly a year and lifts the target to R$10.50 ($1.88), a notable shift in conviction that reflects the bank’s view that the supply-demand picture has materially changed.

How much further upside is implied?

The new R$10.50 ($1.88) target is roughly 8.5 percent above the R$9.68 ($1.73) midday trading level on Thursday. That is a modest gap by Buy-rating standards but reflects the strong year-to-date move already in the stock, with most of the upgrade reflecting endorsement of the prior rally rather than promise of significantly more.

What is the biggest near-term catalyst?

The second-half domestic steel price adjustment Goldman expects, plus the Q2 earnings report that will validate or undermine the earnings before interest, taxes, depreciation and amortization growth path the bank is forecasting at 49 to 107 percent through 2027.

Connected Coverage

The upgrade follows the period when Usiminas was identified as the principal beneficiary of Brazil’s 2024 steel import tariffs, and sits inside the broader market context laid out in our investing in Brazil 2026 reference, with the equity rotation backdrop discussed in our coverage of the recent Brazilian equity rally.