CSN anticipates negotiations for a U.S. steel quota mechanism after tariffs were imposed. The company reported a fourth-quarter net loss but exceeded earnings expectations, leading to a rise in share prices. Analysts predict a positive outlook following these developments.

CSN, a leading Brazilian steelmaker, has indicated optimism about negotiating a quota mechanism with the United States following the imposition of tariffs on steel and aluminum imports by President Donald Trump. Brazil, a significant supplier of steel to the U.S., is opting for dialogue rather than immediate retaliation against what it deems “unjustifiable” tariffs. CSN’s commercial head, Luis Fernando Martinez, expressed confidence that negotiations similar to those in 2018 could be pursued within the next two months.

President Trump implemented a 25% duty on all steel and aluminum imports, emphasizing a shift in global trade favoring U.S. interests, which has triggered immediate backlash from Canada and Europe. Notably, Trump had previously granted exemptions and implemented duty-free quota arrangements for Brazil, utilizing pre-tariff volumes, and the country has since labeled quotas as a viable strategy. Martinez highlighted that the U.S. continues to rely on imports for various steel products.

On the financial front, CSN disclosed a fourth-quarter net loss of 85 million reais ($14.66 million), attributed to high financial expenses. However, the company surpassed market expectations with its core earnings, registering 3.33 billion reais in adjusted EBITDA, which was down 8% from the previous year but exceeded analysts’ expectations of 2.87 billion reais. The net revenue reached 12.03 billion reais, outperforming the projected 11.8 billion reais.

Following the earnings announcement, CSN’s shares increased by more than 7.5%, and its mining unit, CSN Mineracao, experienced a notable surge of around 10%. This performance contributed to CSN being among the top performers on Brazil’s Bovespa stock index, which rose by 1.3%. Analysts at JPMorgan remarked that both CSN and CSN Mineracao exceeded their forecasted results due to unexpectedly favorable costs, hinting at a potential upward revision of consensus estimates.

CSN demonstrates a proactive approach to negotiating tariff implications with the U.S., recognizing the potential for a quota system similar to prior arrangements. Despite facing a net loss, the company’s core earnings have surpassed expectations, illustrating its resilience. Positive market reactions and improved forecasts indicate a promising outlook for CSN amid ongoing trade negotiations and performance improvements in their operations.

Original Source: www.tradingview.com

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