UPDATE 1-Usiminas must downsize to weather Brazil recession -CEO
(Adds quotes from Usiminas executives, details)
By Walter Brandimarte
SAO PAULO Nov 12 (Reuters) - Brazilian steelmaker Usiminas must downsize operations, sell assets and refinance outstanding bank loans to cope with a deep economic recession at home and falling prices for steel products abroad, Chief Executive Officer Rômel de Souza said on Thursday.
Demand for flat steel products has plunged by more than 25 percent on an annual basis as Brazil slumped into its deepest recession in a quarter century, Souza noted during a presentation to analysts in Sao Paulo.
At the same time, export margins have been squeezed markedly as flat steel prices dropped faster than those for raw materials such as iron ore and coal, he said.
"We are losing competitiveness," Souza said. "It gets harder by the day. We have no option but to downsize."
The company has been wrestling with weak demand and high debt, as well as a bitter boardroom battle between its two main shareholders. Usiminas is not considering raising additional capital at the moment, Chief Financial Officer Ronald Seckelmann said during the same presentation.
"That would be a last-resort measure, and it isn't on the table yet," he said.
Usinas Siderúrgicas de Minas Gerais SA, as Brazil's largest producer of flat steel is formally known, has halted operations in its Cubatao plant near Sao Paulo after realizing that reducing output to a minimum was not enough. Continuación...