Credit rating agency Standard & Poor’s (S&P) has downgraded the ratings of three Brazilian steelmakers amid a scenario of weaker domestic demand. S&P said the “severe” decline in Brazil’s civil construction due to the Covid-19 pandemic will affect domestic steel demand throughout 2020.
Brazilian steelmakers are adapting to the new scenario, and some announced to reduce capacity, cut costs and investments to preserve cash flow,” the agency said in a report.
S&P said the pandemic will also affect the three steelmaker’s EBITDA levels, worsening their financial profiles, as the rhythm of a potential recovery post-Covid-19 remains “uncertain.”
The agency downgraded the global scale ratings of Companhia Siderurgica Nacional (CSN) to B- from B.
Both Gerdau S.A and Gerdau Ameristeel Corp had their corporate ratings perspective downgraded from stable to negative, while ratings were rated BBB-.
Flats producer Usiminas credit ratings perspective also went to negative from stable, while ratings reached a B+ global scale rate.
S&P said domestic steel demand in Brazil should decline 20 percent in 2020, year-on-year.