Standard&Poor's Ratings Services' ratings on 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, the company's operations are flexible, as shown during the challenging market conditions of 2009. Gerdau's exposure to the cyclical, commodity-oriented, long-steel industry, and its acquisitive growth strategy partially offset the positive factors. 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 steel operations globally. In recent quarters the group has been pursuing increasing control of its subsidiaries.
