We will certainly resume our capacity, we will put new capacities into operation. So in the short run, there is no other effective mechanism for us to resume our shipments to the domestic market. There is nothing better than the new measures taken by the Brazilian government to fight this predatory flood of imports coming from China. Still speaking about China, I don’t know exactly what is your calculation in terms of our market share in different areas, but I am assuming that you are using information from the Brazil Steel Institute, that they publish information, at the end of every month. And so there are two important aspects here. The first one has to do with what Gustavo said, which is in relation to imports. Whenever we think about Gerdau’s shipments, vis-à-vis the apparent consumption of steel in Brazil, we went from 11%, 12% penetration last year.
And in September, this number went from 11%, to 12% to 23% of imports that penetrated in the country. So not only Gerdau, but the entire industry is suffering because we saw the influx of import materials coming here at costs below the cost price. The numbers from the Brazil Steel Institute within long steels, we also have other categories, one of them being special steels. Given the nature of each segment and also giving the different industries like heavy vehicles, and agricultural, machinery has different uses for long steels. And this sometimes makes it difficult for us to understand the actual numbers. You have to look at the type of product and you have to look at every line in every product to arrive at more precise numbers.
Renata Oliva Battiferro: We also received two other questions related to CapEx. Some other questions have been answered, but Igor Guedes, a sell-side analyst Genial, asked the following question. I would like to understand what level of trust you have in that R$5 billion CapEx guidance and how do you see the dynamics of increasing investments of the company considering a lower EBITDA and less room to generate cash? And Camilla, the sales side analyst from Bradesco also has a question on CapEx and she talks about the R$8.6 billion in CapEx to be invested by 2026, whether we could expect a higher concentration of investments in 2024 or whether it will be something more spread through the years.
Rafael Japur : Thank you both of you. In terms of that guidance of R$5 billion a year — R$5 million a year, we think that we will be able to execute all of the disbursements. We already have a good percentage of the total. Therefore, we still have some room going forward, especially in the fourth quarter, because typically given seasonality in North America and Brazil because of the holidays at the end of the year, we reduce our production activities. Now, speaking about the strategic CapEx and now uniting both questions, the question from Igor Guedes and Camilla’s question, I think both of us, Gustavo and I already talked about our perspective and long-term view for our CapEx investments. And given everything that has been approved by our board, we know that these are not opportunistic investments.
These are all investments that are intrinsically related to our long-term strategic view to ensure the continuity and sustainability of our business. That’s why our cash conversion cycle or the cycle of the industry is not so favorable as we experienced in the past few years, but we know that these are investments that are absolutely essential and transformational. Now, in relation to the pace of the disbursement of that two-thirds that we have yet to execute, considering the total amount of the portfolio by 2026, we understand that it will be prudent for us to phase it out, phase it throughout time, given the pace of every project. In Brazil, we see many engineering companies with difficulties to find people, difficulties to execute some of the investments that were approved in the past few years and also, concerning infrastructure works from previous administrations.
Everything we saw when you look at the supply chain in the past few years, we understand that it is prudent, be it in terms of the financial discipline of our balance sheet and our execution capacity, it would be important to phase it throughout time in a more synchronized way. And certainly, variations either up or down will certainly occur.
Gustavo Werneck: I think you already said it all, Japur. I would like to thank Igor and Camilla for their questions.
Renata Oliva Battiferro: Camilla already sent us a second question, and she talks about the following thing. Gerdau made a series of divestments in the past. Considering political uncertainties in some Latin American countries, like Peru and Argentina in particular, would you consider divesting in these regions so that you could turn your focus to the U.S. and Brazil?
Gustavo Werneck: Well, Camilla, right now, we extensively reviewed our asset portfolio between 2014, 2015 and 2019. Therefore, we are very pleased with the current assets portfolio that we have. We understand that we are a much better company today when compared to what we were three to four years ago. Therefore, right now, we are not contemplating any divestments.
Renata Oliva Battiferro: Perfect. Gustavo Wang [ph], HSBC analyst. He asked two questions, but maybe they were already answered. He wants to know about costs in the Brazilian operation, take into account the drop in the quarter, and how could we consider profitability. He also wants to know about the strike in North America and potential impacts on our results. And if we expect to see an end to this strike, would you like to comment anything else? Or maybe we can give the floor back to Gustavo. I think it was already addressed. And Wu Xin [ph], sell-side analyst or buy-side analyst at Triguno [ph] he wants to know about dynamics for scrap prices considering the main markets in the future, U.S. and Brazil.
Gustavo Werneck: To some extent, the price of scrap in the main markets where we are, the U.S. and Brazil, prices are stable. Seasonality appears now in North America with winter time. We know transportation and logistics with scrap is more challenging from November to March, so we might see a slight change in prices owing to seasonality. It’s also important to know that in North America, it’s important to see how purchase will happen with Turkey. Turkey’s level of export for this conflict area, particularly Israel, this is very high. Turkey exports around one million tonnes of rebar to Israel per year. So let us see what Turkey’s decision will be about this capacity. If it will keep on buying scrap and producing rebar to export, or if it will lower its production capacity, putting less pressure on scrap in North America.
