Standard&Poor's Ratings Services' ratings on Brazilian steelmaker Gerdau S.A. reflect the company's adequate geographic diversification throughout the Americas and privileged cost position in Brazil--arising especially from its strong bargaining power in scrap procurement. Moreover, its strong liquidity has significantly mitigated deterioration in credit measures from the challenging market conditions of 2009. These positive factors are partially offset by Gerdau's increased financial leverage after acquisitions, exposure to the cyclical commodity-oriented long steel industry, and acquisitive growth strategy. Gerdau's business position is satisfactory. The company holds a strong market position in Brazil and benefits from geographic and product diversification, having been an active participant in the consolidation of the steel industry in the region, and it has expanded its specialty
