CSN, a major Brazilian steelmaker, is exploring negotiations for steel quotas with the U.S. in response to recent tariffs imposed by President Trump. Despite reporting a fourth-quarter loss, the company exceeded core earnings expectations, resulting in significant stock price increases. Analysts remain positive regarding CSN’s financial outlook.
In light of recent developments, Brazilian steelmaker CSN has indicated potential for negotiating a steel quota mechanism with the United States. This follows U.S. President Donald Trump imposing tariffs on steel and aluminum imports. Despite referring to these tariffs as “unjustifiable,” Brazil aims to engage in dialogue with the Trump administration instead of retaliating immediately.
U.S. tariffs, effective as of March 13, include a 25% duty on all steel and aluminum imports, impacting global trade dynamics. CSN’s commercial head, Luis Fernando Martinez, expressed optimism regarding the possibility of negotiations within two months, similar to those held in 2018, including a potential quota system.
Historically, while Trump initiated tariffs in 2018, he later provided exemptions and negotiated duty-free quota agreements with Brazil. Notably, the U.S. continues to import significant quantities of various steel products. In financial results, CSN reported a fourth-quarter net loss of 85 million reais but exceeded market expectations for core earnings, posting an EBITDA of 3.33 billion reais, well above analysts’ predictions.
CSN’s net revenue reached 12.03 billion reais, surpassing the projected 11.8 billion reais. Consequently, the company’s shares rose over 7.5%, with its mining division, CSN Mineracao, experiencing a remarkable 10% increase, reflecting positive performance on Brazil’s Bovespa stock index which rose by 1.3%. Analysts at JPMorgan noted both CSN and its mining division exceeded their forecasts due to lower-than-expected costs, indicating an optimistic outlook for future consensus estimates.
CSN’s initiative to negotiate steel quotas with the United States highlights Brazil’s strategic approach to the U.S. tariffs on steel and aluminum. Additionally, despite a net loss, the company has demonstrated strong core earnings, leading to significant positive movements in the stock market. The overall outlook remains optimistic as analysts foresee upward revisions in estimates for CSN’s financial performance.
Original Source: www.marketscreener.com
