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Steel Sector Overview: Gerdau U.S.A. - NYSE Global Opportunities Conference 2005

Explore key data, market share, production trends, and financial insights surrounding Gerdau U.S.A. in the global steel sector from the NYSE Global Opportunities Conference May 2005.

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Steel Sector Overview: Gerdau U.S.A. - NYSE Global Opportunities Conference 2005

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  1. NYSEGlobal Opportunities Conference May, 2005 All data presented in R$ and in metric tons, except when indicated

  2. STEEL SECTOR GERDAU S.A. CONSOLIDATED CAPITAL MARKETS

  3. WORLD STEEL OVERVIEW Production by Countries Other 41% Production in 2004: 1.1 billion tons of crude steel Brazil 3% South Korea 4% Russia 6% China26% USA 9% Japan 11% World Production & Demand EvolutionFinished Steel + 82% In million tons 1,153 1,000 + 85% 830 1,117 698 690 942 632 According to the WSD forecast for 2010, 97% of the world production will be consumed. 772 655 641 603 1985 1990 1995 2000 2005F 2010F Production Apparent Consumption 3 Source: IISI / World Steel Dynamics

  4. INTERNATIONAL STEEL TRADE In million tons GDP Growth Rate 2004(Annual percent change) TOP 5Net Exporters TOP 5Net Importers 9.4 Belgium 2.7 % 10.9 Brazil 5.2 % 25.2 Ukraine 12.1 % 25.5 Russia 7.1 % 31.9 Japan 2.6 % USA 24.6 4.4 % China 22.6 9.5 % Thailand 8.2 6.1 % Hong Kong 5.4 8.1 % Italy 5.2 1.2 % 4 Source: IISI / IMF

  5. WORLD STEEL RANKING Crude Steel – Output 2004 In million tons Arcelor (LUX) 1 46.9 LNM Holdings (NED) 2 42.8 Nippon Steel (JAP) 3 31.4 Mittal Steel (Ispat, LNM and ISG) is currently the biggest world steel company with 60 million tons of installed capacity. JFE Steel (JAP) 4 31.1 31.1 Posco (KOR) 5 Shangai Baosteel (CHI) 6 21.4 20.8 US Steel (USA) 7 19.9 Corus Group (U.K.) 8 Nucor (USA) 9 17.9 17.6 ThyssenKrupp (GER) 10 Riva Group (ITA) 11 16.7 Gerdau will have an installed capacity of 21 million tons of crude steel per year after the investment program in Brazil is completed in 2007. ISG (USA) 12 16.1 Gerdau Group (BRA) 13 13.4 Severstal (RUS) 14 12.8 Source: Metal Bulletin 5

  6. Market Share 2004 Crude Steel Long Rolled Steel Other6% Barra Mansa5% Arcelor(Acesita+ Belgo+ CST)28% GerdauAçominas48% Other12% CSN 17% Usiminas System(Usiminas + Cosipa)27% Belgo35% GerdauAçominas22% Per Capita Apparent Consumption – Finished Steel(Kg/inhab.) 985 Finished steel per capita apparent consumption is still low compared to the developed countries. 489 kg/inhab. Average per capita apparent consumption of developed countries in 2003 602 434 390 278 234 203 181 165 148 104 32 31 SouthKorea MiddleEast Japan India Africa China Brazil USA France Russia Mexico Germany WORLD 6 Source: IISI / IBS BRAZILIAN STEEL SECTOR

  7. STEEL SECTOR GERDAU S.A. CONSOLIDATED CAPITAL MARKETS

  8. COMPETITIVE EDGE • Focused on long steel products manufacturing and distribution • Market mill approach • Up-to-date technology • Competitive production costs • Diversified production processes • Multiple raw materials sourcing • Service and distribution centers • Relevant market share in every country in which the Company has operations • Financial soundness and access to international capital markets • Confirmed experience in turning around distressed operations 8

  9. GEOGRAPHICAL LOCATION North America Steel mills (14) Steel mills (2) Downstream operations (13) Fab shops (29) Scrap collection and processing units (16) Joint Venture (1) Brazil South America Steel mills (10) Downstream operations (8) Fab shops (11) Flat steel service centers (6) Retail stores (70) Retail stores (6) Scrap collection and processing units (8) Fab shops (4) Solid pig iron production units (2) Joint Venture (1) Iron ore extraction areas (3) Private port terminals (2) 9

  10. INSTALLED CAPACITY December 2004 In thousand tons 16,380 7,580 8,290 510 Crude Steel Brazil North America South America Rolled Steel Products 12,970 7,630 610 4,730 Slab, Blooms& Billets 2,610 2,610 Main Products • BrazilBillets, slabs, blooms, merchant bars, rebars, wire rod, drawn products, welded wire meshes, structural, nails, downstream products, fabricated steel products and specialty steel. • North AmericaBillets, merchant bars, rebars, wire rod, drawn products, welded meshes, nails, downstream products, fabricated steel products, flat steel products and grinding balls. • South AmericaBillets, merchant bars, rebars and wire rod. 10

  11. SHIPMENTS 3,355 3,171 3,148 3,134 3,107 136 In thousand tons 137 121 119 144 1,631 1,353 1,334 1,334 1,389 572 632 821 723 722 1,109 1,049 808 915 866 1Q04 2Q04 3Q04 4Q04 1Q05 Net Sales per Ton(R$/ton shipped) 2,200 2,078 Brazil - Domestic market 2,000 1,769 South America 1,800 1,678 1,600 North America 1,462 Brazil - Exports North America South America 1,400 1,302 Brazil 1,200 1,212 1,000 2Q04 3Q04 4Q04 1Q05 1Q04 11

  12. PRODUCTION COSTS Cost of Sales per Ton (R$ per ton shipped) 1,739 1,690 1,650 1,575 1,326 1,258 1,098 1,058 1,095 1,002 1Q04 2Q04 3Q04 4Q04 1Q05 Net Sales per ton Cost per ton Breakdown of Costs – 1Q05 12

  13. FINANCIALS In R$ millions 1Q05 2004 1Q04 1Q05 Main Events • Consolidation of the new North American units (North Star Steel) • Increase of 31% in the average prices (net sales/ton) • Improvement in the operating efficiency and gains in productivity 13

  14. INDEBTEDNESS Mar.05 Dec.04 2003 In R$ millions COST OF DEBT (per annum) Brazil - Domestic currency 15.78% Brazil – Foreign currency FX+5.61% Companies abroad 7.05% HEDGE In R$ millions Foreign currency debt (Brazil) 2,321 Swap operations 162 Exports 3,000 Cash in US$ 1,597 TOTAL HEDGE 4,759 COVERAGE RATIO 2.0 x DEBT AVERAGE LIFE 4.1 years 29 14

  15. FINANCIAL RATIOS Interest Coverage Ratio(EBITDA / Net Interest Expense – FX and Monetary Var.) In R$ millions 22.8 1,715 1,665 19.8 1,415 1,289 14.3 883 8.4 5.6 3Q04 4Q04 1Q05 1Q04 2Q04 EBITDA Interest Coverage Ratio Consolidated Leverage Ratio(Net Debt/EBITDA*) In R$ millions 5,228 4,957 1.8 4,335 4,071 3,847 1.3 0.8 0.8 0.7 3Q04 4Q04 1Q05 1Q04 2Q04 Consolidated Leverage Ratio Net Debt 15 *Last 12 months

  16. INVESTMENTS Investment Schedule Brazil Expansion: US$ 1,620 mmTech. Update: US$ 750 mm Abroad Tech. Update: US$ 800 mm 2005: US$ 1,140 mm 2006: US$ 1,260 mm 2007: US$ 770 mm Total: US$ 3,170 mm Installed Capacity Evolution Crude Steel Rolled Products + 28% 20,950 + 19% 15,490 16,380 12,970 9,230 + 5% + 8% 8,880 8,800 8,240 11,720 + 55% + 40% 6,610 7,580 4,730 2004 2007 2004 2007 Brazil Brazil Abroad Abroad 16

  17. MAIN INVESTMENTS • Greenfield Projects • ARAÇARIGUAMA (São Paulo) – US$ 105 mm Capacity: 900 thousand tons of crude steel (May 2005) 600 thousand tons of rolled products (April 2006) • GERDAU AÇOS ESPECIAIS RIO (Rio de Janeiro) – US$ 293 mmCapacity: 800 thousand tons of crude steel (2007 year-end) 500 thousand tons of rolled products (2007 year-end) • Expansions • OURO BRANCO (Minas Gerais) – US$ 830 mm Capacity increase: 1.5 million tons of crude steel (2007 year-end) • COSIGUA (Rio de Janeiro) – US$ 174 mmCapacity increase: 400 thousand tons of crude steel (2007 year-end) 150 thousand tons of rolled products (2005 year-end) 150 thousand tons of rolled products (2007 year-end) • USIBA (Bahia) – US$ 88 mm Capacity increase: 320 thousand tons of crude steel (2007 year-end) 370 thousand tons of rolled products (2007 year-end) • AÇOS FINOS PIRATINI (Rio Grande do Sul) – US$ 43 mm Capacity increase: 150 thousand tons of rolled products (March 2005) • OTHER MILLS IN BRAZIL – US$ 87 mm Capacity increase: 220 thousand tons of crude steel (2007 year-end) 17

  18. STEEL SECTOR GERDAU S.A. CONSOLIDATED CAPITAL STRUCTURE

  19. SHAREHOLDING STRUCTURE Met. Gerdau S.A. 45% Gerdau S.A. 100% Gerdau Participações S.A. 23% 72% 92% Gerdau Internacional Empreendimentos Ltda. Gerdau Açominas S.A. 66% Gerdau Ameristeel Corp. Gerdau Chile 100% Gerdau Laisa 100% 38% SIPAR Aceros 19

  20. www.gerdau.com.br inform@gerdau.com.br +55 51 3323 2703 Declarations relative to business perspectives are based on current expectations on future events and trends that affect our business. These estimates are subject to risk, uncertainties and suppositions and include, among other, overall economic, political and commercial environment, in Brazil and in the markets we are present in addition to government regulations, present and future.

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