Earlier this month, Brazilian steelmaker Companhia Siderurgica Nacional, aka CSN (SID), posted disappointing operating results for the second quarter of 2009.

Based on the turmoil in the financial markets, revenues, EBITDA and net income were down 30%, 57% and 68% respectively from the second quarter of 2008. Domestic market sales and volume were down 30% and 28% year over year. Export sales were down 32% year over year, while volume was up 21%. Crude steel production decreased 33% year-over-year.

It seems that the short-term outlook for SID is not very encouraging. However, the company showed some improvement over the previous quarter. Steel product sales volume was up 47%, net revenue was 2% higher than the first quarter of 2009. EBITDA was up 7% and EBITDA margin showed an improvement of 1.1% over the first quarter.

At the end of the second quarter of 2009, CSN began producing and selling cement, whose sales are expected to reach 300,000 tons in 2009. The plant marks SID’s entry into yet another new business that has strong synergies with its existing activities, given that the project’s main advantages lie in its raw materials self-sufficiency and the use of previously existing logistics.

CSN’s ADRs have almost doubled since December 2008, which is especially meaningful given that the Dow Jones index rose by just 6% in the same period.

According to the data issued by the World Steel Association last week, global crude steel production dropped more than 10% year-over-year in July but was at its highest level in 2009. Production totaled 103.9 million tons, down 11.1% from July 2008 but up from 99.7 million tons in June 2009.

Although the steel sector scenario remains unpredictable, Brazilian steel makers SID and Gerdau S.A. (GGB) expect a gradual sales recovery in the coming months.
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