Usinas Siderúrgicas de Minas Gerais S.A. (USIM5) Earnings Call Transcript & Summary

Good morning, ladies and gentleman, and thank you for waiting and welcome to Usiminas conference call where we will discuss the results of the fourth quarter of 2020. For those who want to follow us in English, a free translation of the webcast presentation is available on the Usiminas IR website. We also have an [indiscernible] simultaneous translation. [Operator Instructions] Before proceeding, we would like to clarify that forward looking statements made during this conference call regarding the company's business prospects, as well as projections, operational and financial targets related to the potential forecasts are based on the management's expectations regarding the future of Usiminas. These expectations are highly dependent on the performance of the steel sector, the country's economic situation and the situation of the international markets and, therefore, subject to change. Today with us, we have our officers: our Chairman, Sergio Leite; President of Finance and Investor Relations, Alberto Ono; the Industrial Vice President, Americo Ferreira; Vice President of Corporate Planning, Yoshiaki Shimada, Vice President of Technology & Quality; Kohei Kimura, Commercial Vice President, Miguel Homes; Chief Executive Officer of Usiminas, Carlos Rezzonico; Executive Director of [ Solinosis ], Daniel [ Medici ], Managing Director of Usiminas, Fernando [ Marzoni ], Legal Director Bruno [ Paulino ]; Controller Director, Julio Arroyo; and Leonardo [ Canop ] General Manager of Investor Relations. Initially, Sergio Leite will make his remarks and them Alberto will present the results. Now, the questions in the Q&A will be answered. Now, I give the floor to Sergio Leite.

Thank you very much, Leo, thank you to each one of you. Thank you very much for your participation. It's no longer a conference call but it's a live Usiminas. For us, it's very important to have you here with us. Currently, with your permission, I will take off my mask to facilitate the audio. We are gathered here to present the earning results of the fourth quarter of 2020 of the year 2020. These results, as you will see, have already been published. They demonstrate a strong performance of the company last year, which was a very difficult year for all of us. It was very difficult for humanity and where we had to face major difficulties and very difficult moments during the second quarter. During the third quarter, we initiated a recovery and during the fourth quarter, well, we are presenting highly robust results in all of our companies. These results were built through dedication, the dedication of the Usiminas team and the strong performance because of reduced costs, increased productivity, we improved our processes, therefore, an effort intensively developed in our companies and we achieved a number of records here, and one special record is very important for us, that is the EBITDA. The EBITDA, well, we reached BRL 3.2 billion in EBITDA. This figure for us has a very special meaning because it's during the difficult times of 2016, our dream was to have an EBITDA of BRL 3 billion, and we achieved it in the middle of such a difficult year and we need -- and each one of us made a great effort, and we achieved it in a consolidated fashion, where each one of the companies prepared themselves strongly for the performance that we're showing now. These -- these results, you will see with Alberto in details, and we will also highlight some important actions. I would like to highlight a very important project, a project where we are working is the diversity and inclusion project, where we've worked in 5 fronts, involving all the T-Mobile teams. This diversity and inclusion project that has been able to receive national and international awards, it is a very valuable project for us in Usiminas and for us and for us in the management. June last year, we created the general management of sustainability in the company, which is connected to the presidencies and now consolidates and manages in an integrated fashion all of our actions connected to sustainability, actions that had been developed throughout the year. But with the creation of this general management, we were able to focus even more an agenda and SGA is present with more intensity. Today, here, we're going to present, and Alberto is going to state our main actions in our ESG agenda and the main objectives, especially for 2021. This is a commitment from the entire management to work in responsibility, to work with social, environmental responsibility and governance that is a very important point, not only for us, but for all the companies and all the universe -- in the world, right? We also carried out, and I will show you a number of actions in order to increase our competitiveness. And my comment here reflects our spirit when we make certain decisions. And the example here is an example that we communicated in December that was the sale of our headquarters in Belo Horizonte, where we are present, this headquarter that we will leave in the middle of March that was sold to -- to the Foundation Sao Francisco Xavier, that is our social arm that works with health and education and this selling point meant a lot to us. And within the meaning, I would show you 4 special meanings. One of it is that we reduced BRL 130 million. This is was immobilized in this area. And now we can invest in other activities. #2, we are going to a new headquarter in the central area of Belo Horizonte. We will announce the new address in the upcoming days. What is important to highlight that is in this new headquarters, we are reducing the operating cost in over 30% and now we're going to paying lease. Even paying lease, we're reducing our operating cost at 30% and we are doing this in all of our areas in all of our companies. In our São Paulo office, we reduced 50%. Another important point, just for you to bear in mind, in this building where we are present today that has sheltered us for over 40 years, we had 6 floors at our disposal, with 3,400 square meters in each one of these floors, and we already occupied less than half. So now we're going to a new headquarter where we will occupy in a number of floors, 3,200 square meters. That is 1/6 of this headquarter in terms of size. And the legacy is very important for us, the legacy that we're leaving in these headquarters that are very important for us. Here in March of 2022, we will inaugurate Usiminas Hospital, an additional hospital unit in Belo Horizonte that will service, will be of reference because in AR FUNDAÇÃO SÃO FRANCISCO XAVIER, including this hospital that we will -- we will have 6 hospitals and 5 are being built. We are reference hospitals. So when Marcio de Chica has been considered one of the best hospitals in Belo [ Risonchi ]. So it's with this spirit that we continue building the present and the future. Looking for competitiveness, productivity, a great effort to rid us costs, to improve processes, to the commitment with our ESG agenda, innovation is also a very important point for us, and we have already been nationally recognized. We are amongst the companies that more interacts with start-ups. So we are going towards the building of the present and the future. And currently, we are creating our new long-term view, something that we call the Usiminas Vision 2030 as we are building this new vision together. With our pluriannual 2021, '21. Why? Because we want to be able to offer to the market, to offer to our customers, to offer to our employees, the communities where we're present that involve 13 cities in Brazil and we -- our influence affects dozens of cities. And in Valle Duouiso we are strongly influential. And first and foremost, we have assumed the commitment with each one of you, investors and analysts that trust our company, the commitment that we always had, that is to continue working more intensively with innovation, pursuing the improvement of our results, committed to our ESG agenda and to make progress so that we have a better future for companies and for all of our stakeholders. Now I give the floor to Alberto Ono, our Finance Vice President, that will show the results of the fourth quarter of 2020 and of the year 2020. Thank you very much for being with us. Your presence is very important for us in Usiminas. A great hug and thank you.

So good morning to everyone. I am also going to take my mask off, we are maintaining social distancing. Well, ladies and gentlemen, we will see the figures of the fourth quarter, then we will comment on the figures of the year. Now regarding the fourth quarter, now sales of steel, they exceeded 1.1 million tons. We didn't achieve this since 2015 for some time, there wasn't a quarter with such a high-volume. And also 21% above the past quarter, and in the domestic market in sales, we outperformed 1 million tons, almost 1,000,100 tons. This figure is also very important, because we hadn't been able to achieve this level since 2015 and this demonstrates -- this demonstrates that we have prioritized on the domestic market. And you can see that the growth from the third to the fourth quarter, up 37%, is because we prioritized the demand in the domestic market. Regarding iron ore sales, practically, this is stable. What I would like to highlight here is the increase in sales from the mining unit to steel unit. This is -- this is why a blast furnace, one was -- resumed its operation in the first quarter and we had a blast furnace that worked for an entire quarter. And this also shows you how crude steel increased in Ipatinga. And here, we have our EBITDA. Practically, we doubled our EBITDA from BRL 826 million to BRL 1.607 billion with the margin, 29%, an improvement, and we will see in the future. There was an improvement in the Mineração unit. The figures are very similar, but it but with higher prices, but also we have an improvement in our result in our steel unit. In addition to higher volumes, we will see better results in terms of our steel unit. And talking about net profit, there was a variation, very significant of tenfold. But here, we have to highlight 2 noncash flow effects. If we add them, this will add up to BRL 1 billion, from BRL 1.9 billion that we see in net profit during the fourth quarter. As a matter of fact, there are 2 effects. The exchange rate effect because the valuation of the real vis-à-vis the dollar that impacted here and the impairment reversion that was carried out this quarter of BRL 737 million. When you add them, this adds up to BRL 1 million -- BRL 1 billion. But when we discount this cash effect, we have had a very significant net profit. Now our next slide. Here, you can see the EBITDA and the consolidated margin in the last quarters. Here, you can see, as a matter of fact, that we have made progression since the second quarter of 2020, where we had a very negative result, and we have had strong recovery. And another point that I would just like to add in terms of nonrecurring effects during the fourth quarter, we basically had an effect because we sold property in addition to selling our headquarters but we also sold a commercial building in the shopping mall, valle duas . So this is why we have this nonrecurring effect of BRL 151 million. Our next slide now. Here, you can see the steel unit results. Here we have an adjusted EBITDA of BRL 605 million. Therefore, this is an improvement, 4x greater than the last quarter with the margin of 14%. And this is a significant recovery in the steel unit results. Now let's go to our next slide. Here our mining unit. Our mining units has been achieving record results quarter-on-quarter. Here, we have a new record, reaching almost BRL 1 billion in the fourth quarter and a margin of 68%. As we have seen, the volumes of the third and the fourth quarter are very similar. And basically, this is an effect of price and exchange rate during this quarter. Another unit with very good performance and a good recovery were our Solucoes Usiminas, once again, this is an EBITDA record of BRL 137 million, more than double than last quarter. This is the highest historic margin of 10%, with very strong performance during the fourth quarter in this unit. Usiminas Mecânica, as we already mentioned, the intention with the restructuring is to have positive results. And here, you can see although we have a negative result, but it has improved, and this is a result of our restructuring actions that ended at the end of the year. So we do hope that as of now, as of 2021, we are able to attain better results, and we go back to good levels. Now the results of the year. In terms of steel sales, there was a global drop of 9%, basically concentrated in the domestic market, which is 10%. I would like to remind you that the -- we had -- this is because of the drops that we saw during the second quarter, and there was a recovery. The fourth quarter was stronger, but it wasn't enough to recover it -- to recover. When we compare it to the last year, iron ore and iron, stable, although BRL 8.233 million -- it's a new record, but it's a new record for our mining unit. What was a significant -- was exports, 28%. We had almost 6 million tons towards the international market. In terms of EBITDA, as I said, we reached BRL 3.2 million, an improvement of over 60% vis-à-vis 2019, with a 20% margin in the year. And in terms of net profit, we also have a significant improvement regarding 2019, with almost BRL 1.3 million. Just an observation. When we see the results of the year, the exchange rate variation was negative BRL 765 million and impairment reversion, BRL 731 million positive. The noncash effects are lower when we see the year, and this will represent more or less BRL 34 million. In the year, the net profit, we can say, this is -- it's a result that comes from our operational results. Now, so here we can see since 2016, we've had -- as Sergio mentioned, a historic EBITDA since 2018. When we see nonrecurring effects, when we add them, this is BRL 141 million. And I would like to highlight the quarter effect that is BRL 151 million, and we commented the other figures throughout the year. Here, we're talking about our steel unit. Here, our steel unit BRL 1 billion, nonrecurring FX of BRL 151 on the globe -- BRL 160 globally, we were below last year. But when we when we see that we have strongly recovered when we remembered the bad results of the second quarter of 2020. Here for Mineração in terms of the quarters and in the year, this is a new record, BRL 2.2 billion throughout 2020, with a margin of 57%. In terms of margin, we've seen higher margins in the past, but in terms of the total EBITDA of the year, this is a new record for us. Now Sulocoes Usiminas, BRL 212 million of EBITDA and practically, twice of what we observed in the past 3 years. So the year of 2019 had reached a record. And now we have a new record, practically doubling the EBITDA that we've seen in the past. With Usiminas Mecânica here, this is the consolidated result of the year. Here, the result is still negative. Now we have other financial indicators. The first one would be on working capital. Our working capital in financial terms, there was still a drop during the fourth quarter. There was a 4% drop. Therefore, we were below BRL 3 million. Although we had an increase in our steel inventories, here, we have an increase of 8% in tons, totaling almost 600,000 tons because of the increase of production. If we analyze the production, in terms of world products, the increase from the third of 4% was we had a recovery in sales and also better inventories. Although working capital dropped, the days of stock were 48 days. And here, going to our next slide. What about our net debt and cash? #1, I would like to stress that the -- that we've seen an increase of our cash flow since the fourth quarter of 2019. So here, you can observe that we have accumulated cash position. And during the last quarter, there was a significant increase of 30%, totaling BRL 4.9 billion -- million reals and because of a reduction of our debt because of the exchange rate variation, this means that we have a net debt of BRL 1.1 billion and a net leverage, which is something that we hadn't seen since 2008 of 0.3x Therefore, we are way below 1. Regarding our CapEx during the fourth quarter, we had BRL 245 million, maintaining a level of BRL 180 million to BRL 200 million, now slightly above. When we analyze our consolidated CapEx, we are aligned with our guidance on the year. Here, we have BRL 799 million, and as it has been stated, mostly concentrated in steel, that's BRL 576 million. And here, I end my financial presentation, as Sergio already mentioned, we are focusing more, and we're trying to show what we have been doing in terms of ESG, it is important to highlight. And a number of you have already heard me say this, that the company was always concerned with social environmental matters and governance. But I believe that we can do something better to announce how we're working these -- working with these points. So this is why we want to show our main actions in our earnings results. So just to show your achievements of 2020. #1, as Sergio mentioned, as a result of our program of diversity and inclusion, we had a significant moment. Practically, we doubled the number of women in leadership positions during 2020. The diversity and inclusion program started in 2019. So in 1 year, we practically doubled. Now we have women female leadership in organization, reaching 12%. Point #2 would be Camino do Vale program. In 2020, there was a recovery of about 500 kilometers of rural roads with one of our products that is steel aggregates. During 2020, we started our dry stacking and filtering project, with conclusion scheduled for the second quarter of 2021. And also, this is something that we already mentioned, and as a matter of fact, there were more than BRL 27 million destined to combat COVID-19 through our foundation, San Francisco Xavier. And here are our targets, our goals for 2021 and part of our goals for 2022, but these are short-term goals. With the diversity and inclusion program, now we have a target of increasing the participation of women in the operational area, not only in the managerial positions, but also in the industrial area, we want a 10% share of participation of women. Occupational safety, we've been talking about our goals. We want 0 accidents as a target. But for 2021, what we pursued is to have an LTI frequency rate less than 0.3. Now in terms of energy efficiency and greenhouse effects emissions, our target is to have carbon inventories and to participate in the CDP. And in terms of dams, or reservoirs, we have announced to the market we are including the migration of waste disposal for filtering in 2021 and the mischaracterization of the central dam during the first quarter of 2022. The mischaracterization of the dam has already been done in January. So when you mischaracterize the central dam and the deployment of the filtering project and dry stacking during 2021, with this we will no longer have dams with the mischaracterization of these 2 dams and we will interrupt the only dam that is on operation, that is the Samambaia dam, that has a safe design that is downstream. So with this, I end my presentation, and now we're at your disposal to answer questions.

Thank you, Alberto. Thank you, Sergio. And now we will go to our Q&A session. Here, we have a number of questions. So we will try to group these questions so that they don't repeat themselves. #1 comes from Daniel Sasson, Itaú Corretora de Valores S.A. and Rodolfo de Angele from JPMorgan is also posing a similar question. In the steel unit, I would like to know what is the premium on the domestic market after January and February? If the drop of global price has concerned you regarding the sustainability of the prices in the domestic market, can you confirm that the yearly increase in the automobile industry was 35%? Daniel asks why is it below the levels of increase that we saw for distribution in 2020. And Rodolfo also asks about the increase in prices since the middle of last year. What are the expectations for 2021, if we can talk about the increase about the increase in prices in February?

Daniel and Rodolfo to answer your question, I would like to show you the evolution of the international steel market and what we did domestically to follow-up the movements seen throughout the year. We observed since the second semester of last year, a strong increase of the price of commodities in coal, steel, and iron ore, and this was driven by China. China was a very strong increase in the recovery of its economy, showing indicators that were important in terms of growth, not only in the economy and the consumption of steel. This increase of prices also is the pressure of raw material, the exchange rate in Brazil was more intense during the last 2, 3 months of the year. From October to January, we saw a strong increase in addition to what we had in the past 4, 5 months. Therefore, we follow this movement as a response to the pressure of the cost of raw material of our operation. Now we always say that our parity objective, it is a sound objective for any domestic market, and this would be 10%, give or take. We believe that we are reaching this target that was defined by Usiminas for its domestic market. Now regarding the negotiation with the automobile industry, we have to understand the times and the dynamic of the negotiation. Part of the automobile industry goes from January to December in terms of contracts and the greatest part starts the period of new contracts as of April, so April and March. Each one of these negotiations has to be finalized between 60 and 90 days before the beginning of this contract. Why? Because the steel process needs a schedule of production of this plants between 60 and 90 days for the contracts that start -- the start. As of January, these contracts, the negotiations are ended between September and October. Now within this moment when the contracts were negotiated, that would start in January, all the market conditions via cost of raw material, exchange rate and international price allowed us to make adjustments of increases of 40% and not 35%, as you mentioned So this proportion of contracts adjusted as of January represent more or less 20% and 25% of the volume associated to the automobile industry. The other part will be adjusted as of April. So when we from January until today, the evolution has been an additional increase. We have seen here cost international prices, exchange rate and the cost of raw material. So the contracts, as of April, will reflect this movements that go from October up till the date. Now regarding the second question, Rodolfo, when you talk about the increase of prices in the industry, we have already explained in a number of calls that our price policy is different and it follows the dynamic of different sectors. There are different negotiations here. We have the automobile sector with yearly contracts and the other industrial sectors that can be monthly, quarterly or semestrial contracts. So each contract, each business has its terms of negotiation and adjustments. We do not disclose future provisions of prices and volumes. But what we can say today is that the average price of December of 2020 was around 4.5% and 5% above the price of the fourth quarter, and we have already carried out adjustments throughout the 2 first months of this year, which will impact the average price of the upcoming quarters and the adjustments of the price of one part of the assembly line and the adjustment that we saw in a number of industries throughout the first months or weeks of the year.

Thank you, Miguel. Now we have a question, question posed by many. Daniel Sasson; from Caio Ribeiro; Carlos De Alba, Morgan Stanley; Rodolfo De Angele from JPMorgan are asking about the mining unit, Alberto. What about investment to increase the production of iron ore. Can you talk about the CapEx and of this investment? And basically, it is -- if we have an update regarding MUSA and what do we expect for our compacting project?

I thank you for the question. I think in the mining unit, we have 2 points. #1, it would be the initial expectation, in terms of decisions, was for the second semester of 2021 but we had to review a number of points regarding our expectations. What we can see now is that, #1, environmental studies and previous licensing. Before taking decisions, we're seeing that environmental license -- license will take longer than expected, and all mining companies in Brazil will go through and this will change the pipeline of decision, probably not for 2021 and, yes, for 2022. And there is another point that helps us in terms of firm expansion, high valuation that was done at the end of last year showed us that our reserves will last longer. So the -- what -- now until 2026, we will use our reserves. So because of this, we will have a term extension and now we believe that this will not happen in 2021, but in 2022. Regarding the amount of investments, we are still refining our project in terms of amounts. So I will not talk about figures right now, but I believe what is important is that we will have more time to discuss all of this internally, but we do have 2 points. We are leaving this for the future. There are matters regarding licensing and we believe that this will take longer than what we expected in the beginning. Thank you very much.

Thank you, Alberto. Our next question is a collective question. We have Daniel Sasson; Leonardo Correa; and Timna Tanners from Bank of America. All ask about capital allocation because we ended the year with practically no debt. What are the best opportunities that the company sees in terms of capital allocation and if there -- you could elaborate on this?

I thank you all for your question. Regarding capital allocation, our first priority is to finance our CapEx. As we mentioned in our guidance that was published today, the CapEx guidance for the year is going to be BRL 1.5 billion and for the steel unit will be BRL 1.2. So the main focus here will be CapEx. So this is an issue that we will prioritize that will be the generation of our own cash flow for these investments. In addition, what we are analyzing, although the net debt is low, we do understand that perhaps it would be proper to see gross debt and perhaps we could carry out another action that would be a second priority -- but our first priority is our CapEx -- is to be reassured that our cash generation will be sufficient and adequate to finance our projects.

Thank you, Alberto. Our next question from Thiago Lofiego from Bradesco BBI. Could you please elaborate on cost pressure in the coming quarters. What about the cost of slabs will be higher? Or if we still have inventories with lower costs and also the cost of coal, how we will see the evolution of this item in the upcoming quarters?

Thiago, regarding the cost of our slabs. The trend is to see an increase at least during the first quarter. And why? Because by and large, where we use the slabs that are bought is in Cubatão, there is a fast overturn. We don't have a high stock because there is fast overturn and all the price effects, like in the last quarter in the international slab market, is reflected on the next quarter because we have mainly 4 slabs that were bought. In the domestic market, we have 2 main suppliers of slabs. The supply lead time hasn't been broadened while the imported is longer. There is fast turnover, so we will see effects in the quarter because there will be an increase in the cost of the slab, and this is something that we have already been observing since the third quarter and the trend, yes, is a rising price. Thank you.

Our next question from Leonardo Correa, BTG Pactual. He wants to know about the carryover of the -- of the price of steel in the first quarter. Although we don't announce prices, we can talk a little bit about real data, so that you can calculate this. The average price of December 2020 was 4.7%, 4.8% above the average price of the quarter. We also adjusted prices to our customers since the beginning of the year for the distribution sector and new projects and also 4 contracts in the industry that were updated in the beginning of the year. We also have the adjustment for the automobile industry that started their contract in January, and this was an increase of 40% for a proportion of 25% of this automobile sector that we service. Therefore, you can make your own calculations after I have given you these real numbers.

Thank you, Miguel. Our next question for Carlos Hizoney from the mining unit. Carlos De Alba from Morgan Stanley is asking what was the quality average of the iron ore during the fourth quarter and what is the expectation for the year 2021?

Thank you, Carlos, for your question. MUSA has a number of products. We can talk about an average quality because they are defined next year is the average, we could say. We have a constant trend. They had an average of 64.35%. Silica, 3.3; aluminum, 1.1. These are concentrated. Now we have a product. We have products that have quality differences in the domestic, the export market. But in average, we can say that iron is 61, 62; silica can vary between 6.6 to 7.7, give or take; and alumina of 0.9. As of now, we have a new plant. It is a high-frequency plant that allows us to produce product of better quality. We are in a ramp-up curve and the silica that is for 2.5. So we see the quality of the last quarter and we believe that we will maintain this throughout 2021 but with periods where there will be a drop of quality because of the licenses that are very important today. Will we consider the situation of last year. So the licenses are very important and this is something that is connected to quality, and this will determine if we will be above or below the quality.

Our next question from Rafael Barcellos, Santander and Rudolfo, JPMorgan. I'm grouping both, they want you to elaborate what the inventories are like in the chain and what about the portfolio of orders in the upcoming months and when do we believe that the productive chains will have their inventories normalized?

Thank you, Rafael, Rodolfo. It is a fact that the inventories of the chain now have been improving. The chain, by and large, reached minimum levels of inventory by the end of the year. Now, obviously, there are sectors that have been more affected than other. But when we see the inventories of processed and finished products from the steel sector, or steel intensive sectors, we can see very low levels. The automobile sector still has a chain that has been suffering in order to guarantee a service level, but this segment needs. Now when we see the level of inventories of cars in the garage was 10 days, we had never seen this. It improved in terms of days of sale. But in our view, we will need 2 or 3 additional months in order to normalize our inventories, by and large, for the different chains. Now in distribution, Inda announced a slight recovery of the inventories at the end of the year. And we believe that January, February and March, will continue the normalization trends in terms of the inventories that the chains need to operate normally and efficiently. Now the levels of inventories are based on the levels of expectations of the market. Today, the expectations are positive and practically in of the segments. The automobile sector through on AVI has announced an increase of 25% of production of cars this year. [ Abema ] also announced a strong recovery in equipment and machinery, construct -- the construction sector sees solid demand with very positive prospects for the year. So we believe that this inventory demand will normalize in the upcoming 2 or 3 months, but will depend on the future expectations and demands from each one of these sectors.

Thank you, Miguel. Our next product for Alberto from Udi Pereira from XP. He's also asking about capital allocation, consider ever-growing demand? And how do you see the resumption of the primary areas of Cubatão?

Udi, thank you for your question. I, first and foremost, I want to stress that we are observing the recovery of demand. Nonetheless, by and large, when we see global demand for steel, when you see the projection of steel in Brazil for 2021, we believe that this will be a growth of 6% and -- give or take. A growth of this level doesn't justify to resume operations in the primary area of Cubatão. What we have done first, we are resuming the blast furnace 2 of Ipatinga that we interrupted last year because of the crisis, and it's taking some time because we need CapEx. It is already ongoing. It's on this -- maintenance is underway. And in June, it will be up and running. So with this, we will have an additional part, 400,000 -- 600,000 tons of our own steel production. So we are already doing this, and this is a next step in terms of an increase of production of steel. The next step, we would still need more steel consumption than what we know or what we've seen in terms of expectations of steel in Brazil for this year. This is something that we could think in the medium run. But for the short run, we are not considering this scenario.

Thank you, Alberto. Our next question comes from Caio Ribeiro from Crédit Suisse. He would like you to elaborate the demand of...

Here, we -- as we can see, as you can see, our -- I think that here the heavy plate. We could see heavy plates in a number of infrastructure. This segment hasn't had this increase, like the rest of the economy. Still, we have the project of infrastructure. We have this in our portfolio, but we haven't started. Another segment connected to heavy plates is oil and gas. This has been one of the segments that has had weak demand, and it's not driving the recovery for the demand of heavy plates, but there are other segments that are positive, like machinery and equipment, there is and there are orders, and there has been an evolution of the use of our equipment. Now wind energy also -- wind power is making progress in Brazil because there are projects that are undergoing. We have projects in our portfolio. And this is why we have used 50%, remembering that we always, we have a unit of heavy plate interrupted but we are increasing the use of our machines to make heavy plates in Ipatinga.