Usiminas Falls as BTG Pactual Says Sell on Crimped Steel Prices

Usinas Siderurgicas de Minas Gerais SA, Brazil’s second-biggest steelmaker by market value, fell to a five-week low after Banco BTG Pactual SA (BBTG11) cut the stock to sell and said prices for the metal aren’t likely to rise.

Usiminas, as the Belo Horizonte, Brazil-based company is known, slumped 4.6 percent to 11.48 reais at 1:19 p.m. in Sao Paulo after earlier reaching 11.45 reais, the lowest intraday price since Dec. 17. The stock had doubled over the past six months.

“We are downgrading Usiminas after its strong six-month performance,” BTG Pactual analysts Edmo Chagas, Antonio Heluany and Gregory Goldfinger wrote in a note to clients dated today. “The market is too enthusiastic about a potential earnings improvement, and we see significant room for disappointment.”

BTG estimates Usiminas will post earnings before interest, taxes, depreciation and amortization of 1.6 billion reais ($780 million) this year, less than the 1.8 billion reais average estimate of 15 analysts surveyed by Bloomberg.

Steel prices are unlikely to rise given excess global capacity in the industry, the analysts wrote.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at

To contact the editor responsible for this story: David Papadopoulos at

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