* Ouro Branco plant in Brazil exporting half of output
* Gerdau says non-traditional flat-steel output gaining
* Brazil steel-plate market to shrink 20 pct or more, Gerdau
By Jeb Blount
OURO BRANCO, BRAZIL, Sept 15 Brazil's Gerdau SA
, the No. 1 long-steel producer in the Americas, is
counting on non-traditional flat-steel exports and a data
venture with General Electric Co to help weather a
world-steel slump and sharp domestic downturn.
Gerdau said half of the output from its Ouro Branco steel
complex is now exported. Growing production from the
higher-value hot-rolled coil and steel plate lines at the plant
are winning orders from new British and German clients, said
Rodrigo Soares, Gerdau's head of Brazilian industrial steel,
during a media visit to the plant on Wednesday.
"Brazilian demand is bad, so we must export." he said.
"Being able to sell so much output abroad shows we can compete
internationally on price and quality."
Gerdau planned Ouro Branco's $1.5 billion flat-steel
expansion during Brazil's boom. Brazil now faces its worst
recession in decades. Worse, world supply outstrips demand,
major construction clients are mired in the country's
biggest-ever corruption scandal and the slowdown has crimped the
Porto Alegre, Brazil-based steelmaker's ability to pay debt.
Historically, Brazil's flat-steel producers export about a
third of output during domestic downturns. Flat-steel output and
high exports are a change for Gerdau, traditionally known for
long steel, used mainly for concrete reinforcing bar in
construction, structural shaped steel and other civil
Ouro Branco's hot-rolled coil line, which opened in 2013, is
operating near its 800,000 tonne-a-year capacity, Soares said.
The steel-plate line, which opened in July, will process about
100,000 tonnes this year, about a tenth of its 1.1
million-tonne-a-year capacity. Both use slabs from the plant's
4.5 million-tonne-a-year blast furnace.
While Brazil's weaker real makes Ouro Branco's products more
competitive abroad in dollars, it has also attracted
anti-dumping actions in the United States. As a result, U.S.
exports are small, Soares said.
But these gains will only limit falling sales and profit.
Brazil's market for steel plate, used to build ships,
wind-turbine towers, oil tanks and pipes and other heavy
equipment, will fall 20 percent or more to 600,000 to 800,000
tonnes this year, Soares said.
After closing one of two lines last year because of the
downturn, rival Usinas Siderurgicas de Minas Gerais SA
, the only other domestic producer of steel plate, has
a capacity of 500,000 tonnes a year.
Soares says the Ouro Branco mill, despite being far from
Brazil's coast and easy access to cheap water transport, is
still competitive in export markets because it is only
kilometers away from high-quality iron ore mines, reducing a key
raw material cost for site's blast furnace.
Long steel is mostly made with scrap in small electric-arc
furnaces close to clients, cutting transportation costs in a
competitive civil-construction market.
Flat steel is mostly made from iron ore in coal-fired blast
furnaces at large capital-intensive mills, often far from
clients. High quality requirements often make price less
Gerdau has hired GE to fit its Brazilian and U.S. mills with
thousands of sensors and data-mining software to anticipate
expensive maintenance shutdowns, the first such system in the
world steel industry, Soares and GE said.
The Brazilian project will cost 5 million reais ($1.5
million) and save 15 million reais a year, Soares added.
($1 = 3.34 Brazilian reais)
(Reporting by Jeb Blount; Editing by Christian Schmollinger)