The ratings on Brazil-based Gerdau reflect our assessment of the company's "satisfactory" business risk profile and "intermediate" financial risk profile. Supporting factors are Gerdau's adequate geographic diversification throughout the Americas, a still-favorable cost position in Brazil and efficient operations overall, and "strong" liquidity. Offsetting these rating strengths are Gerdau's exposure to the cyclical, commodity-oriented, long-steel industry; fierce competition from imports; and an acquisitive growth strategy. Gerdau holds a strong market position in Brazil and benefits from geographic and product diversification in the steel industry in the Americas. It has expanded in specialty steel globally, a segment that accounted for about 25% of its consolidated EBITDA in 2011. Profitability has declined significantly since 2010, with the EBITDA margin standing at 12%
