Steelmaker CSN Cuts Its Loss to $109 Million as Cheap Chinese Steel Floods Brazil

CSN Loss: What Happened

Companhia Siderúrgica Nacional (B3: CSNA3) is Brazilian industrial history listed on an exchange: founded by the state in 1941 to build the Volta Redonda mill that launched the country’s industrialization, privatized in the 1990s, and controlled since by Benjamin Steinbruch’s Vicunha group (insiders hold about 55%). Today it is really four businesses — flat steel, iron ore mining (via CSN Mineração), cement, and logistics — welded to one heavy balance sheet.

The latest reported quarter, published in May, showed a net loss of R$555 million ($109M), an improvement of 24.2% on the R$732 million lost a year earlier, per ADVFN. Revenue reached R$10.6 billion ($2.1B) with adjusted EBITDA of R$2.6 billion ($510M) — a 23.9% margin that looks respectable until you see how it splits between divisions. The market’s verdict was harsh anyway: the stock fell after the report on cash burn and debt, per Seu Dinheiro.

A beta of 1.34 — the highest of any company in this earnings series — is the market saying what CSN is: the most leveraged, most volatile way to trade the Brazil-China industrial cycle on the B3.

Key Drivers Behind the CSN Loss

China gives and China takes. CSN’s mining arm sells iron ore into Chinese demand — that business is fine.

But China’s own steel glut is being exported to Brazil at prices local mills call dumping, and CSN’s steel division is bleeding for it: volumes down 2.5%, segment revenue of R$5.6 billion ($1.1B), and an EBITDA margin of just 7.0% — against roughly 30%+ in mining. The same ship that carries CSN’s ore to Qingdao comes back, in effect, loaded with the steel that undercuts Volta Redonda.

Management’s counterplay is deleveraging by subtraction: asset sales, a possible minority stake sale in the cement business, and squeezing working capital. Leverage ticked down to 3.36x EBITDA from 3.48x — progress measured in basis points against a R$40 billion problem.

CSN Financial Detail

The table is the whole story: revenue flat for five years around R$45 billion while profit went from R$12.3 billion — the commodity-supercycle jackpot of 2021 — to three consecutive annual losses. Same assets, same tonnage; what changed is the price of steel and the cost of carrying the debt.

Four large misses in five quarters: the sell side keeps modeling a turnaround the steel market keeps canceling. Treat any consensus number on this stock — including the R$8.07 target — with corresponding humility.

Management Signals

Benjamin Steinbruch has run CSN through every crisis since privatization, and the current playbook is his classic: hold the assets, sell minority slices when the price is right, lobby hard for import protection, and wait for the cycle. The explicit emphasis on deleveraging and asset sales in the results release is the message to creditors; the unchanged dividend-less reality is the message to shareholders. Patience is mandatory equipment.

What to Watch Next

Trade defense: Brasília’s pending decisions on steel import tariffs and quotas are worth more to CSN than any quarter — every percentage point of protection flows straight to the 7% steel margin. Asset sales: a cement or mining stake sale at a good multiple would repair the leverage math overnight. Iron ore prices: the group’s cash engine. 2T26 in August: whether the loss keeps narrowing. China stimulus: the only force that fixes both of CSN’s problems at once.

Risks

Leverage is the existential one: 3.36x EBITDA with three straight annual losses leaves little room for a bad year in iron ore. If Chinese steel keeps arriving and Brasília’s protection disappoints, the steel division’s margin has no floor in sight. Refinancing costs stay punishing while the Selic is high. And the controlling shareholder’s conglomerate structure has historically traded at a governance discount the market shows no hurry to forgive.

Steel Sector Context

Brazil’s steel industry is fighting the same war as Europe’s and America’s — against Chinese overcapacity — but with thinner armor: tariffs are lower, and the currency often helps the importer. That is why Usiminas’ profit doubling this week (on cost cuts and mining) and CSN’s narrowing loss read as the same story: Brazilian steelmakers surviving on everything except steel.

For investors, CSNA3 at 0.54x book is the deepest-value, highest-risk expression of a bet that either Brasília protects its mills or Beijing stops flooding them.

This report is part of The Rio Times’ Company Intelligence coverage of B3-listed companies. It is journalism, not investment advice.

Read More from The Rio Times

• Banco do Brasil Profit Halves as Farm Loans Sour; Stock at 0.6x Book
• C&A Brasil Grew Its Profit 78%. Its Stock Is Still Near a One-Year Low
• Fuel Giant Ultrapar’s Profit Jumps 151% as Brazil Cracks Down on Fuel Fraud