Companhia Siderurgica Nacional S.A.

Good afternoon and thank you for holding. At this time, we would like to welcome everyone to CSN's conference call to present the results for the second quarter 20. Today, we have with us the company executive officers. We would like to inform you that this event is being recorded and all participants will be in this and only mode during the company presentation. Ensuing this, we will go on to the question and answer section. Should any participant require assistance during this call, please press star zero to reach the operator. We have simultaneous webcasts that may be accessed through CSN's Investor Relations website at ri.csn.com.br where the presentation is also available. The This replay will be available for one week. Now, once again, you can look at the presentation at your own convenience. Before proceeding, we would like to state that some of the statements herein are near expectations of the present and are based on the current assumptions and opinions of the company management. They are future events, performance, and events that may differ materially from those expressed herein. And, in fact, actual results, performances, or events may differ materially from those expressed herein. As a result of several factors such as general and economic conditions in Brazil and other countries, interest rate and exchange rate levels, future rescheduling or prepayment of debt denominated in foreign currencies, protectionist measures in U.S., Brazil and other countries, and general competitive factors at global, regional or national basis. We would now like to turn the conference over to Mr. Marcelo Cunha-Hibedo, Investor Relations Executive Officer, who will present the company's operating and financial highlights for the period. Mr. Hibedo, you have the floor. You may proceed, sir. A good day to all of you, and thank you for participating in our earnings release presentation for the second quarter 2020. Before beginning, due to the logistic difficulties caused by the pandemic, as speakers we have myself and Luis Martinez, our Executive Commercial Director. Now, before we speak about the highlights of the period, I would like to highlight that we continue within that context of the pandemic. I would like to take advantage of this earnings call to update the market on the impacts of the pandemic on the company and making an analogy. Well, our executive officers have attained very positive results during this very turbulent period. We have the good fortune of having a very limited number of cases within our operating areas in the mines or at the port or even at our administrative offices. And all of this thanks to the protocols and the very stringent procedures that have been followed not only by the leadership but by our entire labor force Making it possible not to impact operations, we have not had any interruptions. And of course, we do have a higher absenteeism rate. A few impacts on procedures, but without an impact on results. All of this thanks to this alignment and cooperation. During the period, we were also able to comply with all of the requests of health authorities, the labor ministry, the health ministry, adjusting our operations. And we do believe that the worst is over, is behind us. And going forward, we think that we have a very low risk that this will continue to cause a problem for our businesses. We go on to the highlights for the period. We are on page two of the presentation. The first highlight was a good operational result measured by adjusted EBITDA, especially the positive surprise in our business that has generated most of the results, which was mining, but also in steel and other businesses. We had a beginning of the quarter highly impacted by the lockdown and the quarantine in the larger cities and the markets where we are active. And the initial situation was a deep impact on our financial results and the steel production. The recovery has been a factor that we imagined, especially As pertains to demand, we have price stability, as you will see, and continuity of our operations. And this has enabled us to sequentially recover our results. And along with a gradual recovery of volumes in mining within a context of good prices, valued prices, we got to an EBITDA of $1.9 million. Now in the context of a pandemic, this was surprising and was surprising even for the more optimistic. In terms of the second pillar of our highlights, this was a quarter of deliveries. We have been working to withdraw pressure on our liquidity, lengthening our liabilities. And in the second quarter, Thank you very much. Along with access to more financing in Brazil or abroad, using our companies in Europe and the United States, we had a significant increase in liquidity, which is essential during this crisis. And this is a highlight that we celebrate. The last point is that one-off increase in leverage due to the currency devaluation. But once again, our hedge funds and Eneas Garcia Diniz. Thank you very much. We made more than 600 million reais in mining to reduce our indebtedness, and this has enabled us to keep our leverage constant. Now, with that visibility of having better results, we will be able to set forth a very determined guidance to reduce leverage to less than four times. until the end of the year. This is something that we announced last night and that we will remark on during the presentation. These are the highlights, and we go on to page number four, the evolution of EBITDA, business by business. The growth of consolidated EBITDA was 45%, an addition of more than 500 million households. And the surprise was not the significant growth in mining because the base of comparison is very weak. We were affected by rainfall and low production. What surprised us were the better results of the steel mills, even despite the context, a growth of 29%. and the growth in other businesses as well. In cement, the growth was 95% in terms of EBITDA and with a favorable combination of a growth of volume and prices and a good operational performance when it comes to cost. And our efforts towards containing costs is showing results. We see a contribution of $57 million Quarter on Quarter, coming to 1.925 as total EBITDA. We go on to page number five. To speak about financial indicators, we begin with CAPEX that remained at the levels of the first quarter, but with a significant trend towards reduction expected for the second semester. As we had commented, We carried out a review on investments expected for 2020. We devoted minimum to security, sustainability, with a guidance of $1.1 billion, half of what it was last year. Of course, to preserve our liquidity within this context, it is temporary. The second cash generation element was Working Capital with good news on the front. We were able to offset the increase in the finished product inventory because there was a sales restriction with a series of initiatives that went through the lengthening of periods offered to suppliers, shorter periods to receive our export revenue, and this led to a cash generation of more than $400 million during the period. And what we see below extends at $1.4 billion with a favorable comparison vis-a-vis previous quarters. And we're going to accelerate cash generation. We go on to page number six. and that $1.4 billion, as you can see, was essential to offset a growth in our debt that arises from a devaluation in the exchange rate at the end of the first quarter, $1.44. It began at $1.20. It increased our debt by $1.48. And were it not for the strong cash generation, we would have had an increase in debt. It remains constant at 33 billion reais. As I have already mentioned, this increase will be more than offset by a growth in EBITDA. This is our natural performance. Our cash generation in dollars is of 65 to 70%. And for the next 12 months, we expect a proportional growth, which means that net debt will move away from previous levels due to the exchange devaluation. That is why we were able to set forth a new guidance that will be less than 3.75%. We hope to have a rapid evolution and still without financial initiatives. Thank you very much. What we would like to highlight is the increase in liquidity, as we see in page number seven. Cash came to $5.2 billion in terms of adjusted availability. And of course, this is in accordance with our expectations for growth, a liquidity that is higher than our short-term obligations. and we can observe that we were able to achieve this through the lengthening, the access to new financing and other initiatives. Our liquidity is above our short-term debt. We were able to finalize a negotiation with Bank of Brazil and we have $1.4 billion additionally and Lengthening with Pride and Thanks. With this, we conclude our efforts regarding the year 2020. And in the second semester, we will begin to focus on the years 2021 and 2022, where we have big dreams. We would like to completely finance this amortization to reduce our short-term pressure. We are at a good moment globally in terms of liquidity. We're going to reduce leverage, bring greater liquidity, and this will enable us to extend most of the amortization expected for 2021-2022 in the second semester. With this, we go on to the highlights per business. We begin on page number nine with the steel performance. And naturally, we had a reduction in volumes. The volume of a million and 3,000 tons, a drop of 12%. But notwithstanding, we should celebrate this in the domestic market, a drop of 20% at the beginning of the crisis. The reduction foreseen was of 40%. What we saw was a reduction of 29%. And even so, our reduction is less than that of the market. I've seen products and sectors were not exposed as other sectors during the crisis as the automotive and white line lines. And our geographic location has been very helpful in Although the global steel market has been weakened, we were able to increase our exports by using our export channels through subsidiaries in Portugal and the United States and direct exports, taking advantage of the appreciation in the exchange rate. When it comes to prices, the results were also good. A drop of volume of 12%, Eneas Garcia Diniz which translates into production and record steel productions in that country and China has exported steel for the first time in June and international prices have become interesting bringing us a parity with local prices and giving us room to transfer costs this still is not reflected here and without a doubt Martinez will remark on this during questions and answers. With this, we were able to have an increase in equity, 6%, despite the very challenging environment. And with a significant improvement in the business in Brazil, with the businesses in Europe and the United States being more impacted, We see a disproportional growth in EBITDA in Brazil, not only in flat steel, but also in long steel. Long steel was transformed in the last year through operational enhancements and resiliency of stable construction. And this quarter represents almost 10% of our results in Brazil for the quarter. We go on to page number 10 with EBITDA. Thank you for joining us. And this quarter has been much more stable and the blast furnace has shown its capacity. We have a growing production. Last year at the worst point of the crisis, the blast furnace produced six tons a day. We now have a pace of 50% higher, 9,000 tons per day. And even with the stoppage of blast furnace two in May, Our slab production has been constant vis-a-vis the first quarter. And, of course, this translates into more competitive prices. In the quarter, we have iron ore that increased its price and, of course, the exchange appreciation. And you see a cost of slab, which is... That is an indicator that we had not attained in the last two and a half years. Because of this, our adjusted EBITDA continues to improve, and the trend is to have an improvement in prices in the second semester, with a positive impact on our sales per ton. On page number 11, we speak about the mining performance as had been foreseen. An important jump because these are the abnormal prices in the first quarter due to delays in the mining front and rainfalls. The recovery was faster than we had expected. All of this was attained in the middle of the quarter with growth. And we also have growth because of opportunities The price of iron ore is so favorable that even the lows are below 58%, we have obtained surprising margins, enabling us to use these shipments as an opportunity and with better revenues per ton. and the price realization was marginally affected. We see that the price realized in dollars was marginally lower vis-a-vis the first quarter, especially where the indicator slats have disappeared. But a positive impact on profitability and this is how we show that growth of 54% in our EBITDA. The second best EBITDA for the mining unit in history. What we see in terms of production is a clear trend for recovery. The guidance is 33 to 36 tons of tons. Besides, we purchased some third parties in 2020. And in the second semester, we expect a resumption of volume closer to 10 million tons. which will enable us to increase our operational efficiency and cost of production, once again aiding and abetting our margins. Finally, on page number 12, a comment on our cement performance. Now, we hope that not only this quarter, but in coming quarters, we will have a positive phase of recovery. This is what we have observed. And of course, this Translated into our numbers as well, not only in terms of volume, we had a growth of one digit, but also in our prices. There's a two-digit evolution in the market, and our net revenue grew almost 20% during the quarter, with a positive impact in profitability measured by EBITDA, 27 million plus 16%. We believe that the residential projects and the new launches will continue to take place. The market is capitalizing. This is a trend that should prolong itself during the market, and the cement unit will gain another level of relevance within CSM. With this, we would like to conclude the presentation and we open the floor for questions and answers. Thank you. We will now go on to the question and answer session for investors and analysts. Should you have any questions, please press star one. If at any moment your question has been responded, you can leave the queue by pressing star two. Please take your phone off the hook when posing your question. So that we can have optimal sound quality. Our first question comes from Tiago from Previsco BBI. A good day to all of you and thank you. I have two questions. The first referring to volumes in mining for the coming quarters. How is this evolution going to work? And, of course, you have that issue of authorization. And we do think this will have a strong impact on production during the year. Now, to work with 35 million fans, if this is feasible for this year. The second question refers to the liquidity events and capital allocations. Considering you have been able to renegotiate your debt with the bank and you're generating cash, should we expect further prepayments, higher sales in mining, or are you somewhat calmer at present and so you now have a positive accounting balance? Which means that you are calmer when it comes to your balance in general. And this question leads to capital allocation. What is it that we should expect in mining or eventually in a new line downstream during this period of the pandemic? What is it that you're thinking about for this period? Thank you. Ladies and gentlemen, please hold while our speaker reconnects. Thank you. Once again, Marcelo Ribeiro has been able to recollect. Marcelo, would you like me to repeat the questions? No, the first refers to mining volumes, and secondly, the liquidity events. And I complemented the second question with capital allocation. This trend for improvement in your balance leads you to think differently About what in terms of capital allocations will this be done in mining or any new line galvanized products as part of your steel mills? Very well. Thank you for the question, Sable. In mining, as I mentioned, our guidance is $33 to $35 million, and we have been Thank you very much. Regarding the liquidity event, we will not put aside our goal of being below $23 billion for the coming year, for 2021. And as I mentioned during the presentation, this is in effect with the assets, with the opening of capital and subsidiaries, and maybe both. We continue to work on this. We're going to perhaps survey an IPO for mining as we have already remarked on. I think the moment is favorable. We have good liquidity globally and we're undergoing an analysis at this point. The sale of the subsidiary in Germany continues to be a possibility. We came to a standstill because of the pandemic, but This is still part of our game and there are other possibilities. A streaming in iron ore, Uzi Minas. Of course, these assets were already part of our plans and we will use this to reduce our indebtedness to respond to the second part of your question. All of this will be geared to investment-seeking opportunities For growth opportunities that are attractive. And the most important is an expansion of mining. As mentioned previously, the project of the plant of 10 plus 5 million is proceeding full steam. And in the month of May, we obtained a prior license from a tender. Very interesting. And we're speeding up with the detailed part of engineering. And we're going to begin the coming year. We have $500 million that will be an investment for this. And we also have investments in steel mills and investment of capacity and revamping. And at this point in time, without truly expanding the production, of course, the galvanized This project is very interesting, but we have to be cautious because of what is happening with the automotive industry globally and, of course, dividends. With the minimum mandatory dividends paid off, we will continue on with 25% of our net revenues. Marcelo, if you allow me to go back a bit. Thank you for joining us. Which are the ones that you are focusing on mainly? Well, the ones that we're working on actively at present, probability is a crystal ball, of course. But we're actively working on the possibility of holding an IPO for mining. And we're also working on negotiating the sale of some of our assets. These are the projects that are underway presently. And the probability of this happening, as I said before, is somewhat binary. I really can't say more than this. These projects are well-informed. They are relevant probabilities. They're not remote probabilities. Very well. Thank you. Thank you very much, Ms. Salas. Our next question comes from Danielle Sasson from Itaú PBA. A good day to all of you, and thank you for taking my questions. I have a question, Marcelo, referring to caste generation. I had a slight difficulty in understanding the 1.4 million for caste generation. Especially because of the impact you have mentioned in the exchange variation in the previous quarter, you had a problem with idleness, something that wasn't very obvious. Now, perhaps you could help us to conciliate this amount and what it is that most impacted this cash generation situation. During the quarter, a second question to Martinez, who still has not spoken up this quarter. Martinez, if you could explain that surprising performance for the steel price in the domestic market. What is it that underlies all of this? Is it distribution? I know that you made some attempts in June. and the quality, the coded products. If you could share with us your expertise and your forecast for prices going forward. Thank you. Well, regarding the evolution of net debt, we have a bridge that explains stage by stage of this variation reaching 31 that 1.4 billion ends up being offset by 1.48 of exchange variation and that is why we have that slight increase. Now the only thing that has not been included in these two concepts is the prepayment the advance by Glencore we had an increase of 68 million. Now why do we exclude this because we just announced another one of 600 million and we have a line of others which is the only thing with a difficulty of conciliating 100 million part of this 60 million refers to our contribution to the Transnordestina work which is something non-recurrent it's the end of a commitment we had done at the beginning of the work The rest we have conciliated very well through explanatory notes in the release. You should look carefully at the footnotes referring to our cash flow. Once again, should you have any doubt, we are at your disposal to clarify your doubt. I now give the floor to Martinez. Good morning, Danielle. Thank you for your question. And I have to be intellectually honest. To be able to respond to your question and to respect the report done by analysts and to respond to your question with unnecessary detail about the CSN performance, Marcelo has already told you some of this, but I will give you other details to solidify what we're doing going forward. Our net revenue with all of this turbulence in the market and the world dropped only 2.8%. We maintain a level of 3.5 billion reais per quarter. Another aspect which is very important, and we see the importance of having a good price. The price is the best asset a company has. We have a price of $3,430, 10% in this highly challenging and unfavorable situation. You have to be more than resilient. You have to be tenacious not to go bankrupt. And in the second quarter, Daniel, although there was a drop of 20%, we had a drop of 12% for the entire semester. which is something positive in my opinion. Now if we go into greater details of what we did, I think perhaps we never had such a mix of added value. We got 33% of our sale of flat steel and if you add this 750,000 tons of flat steel, 400,000 tons of coated material. And of the 400,000, 100 or 110,000 tons were sold in the United States with a local premium. It helped us a great deal because of the dollar and the U.S. prices. Another very important price is that of the tin plate, which helped us to give thrust to our results. The prices at present are 5,500 reais per ton, and I got to a volume of 100,000. 750 sold, 400,000, and then the 10 plates. So if you calculate the price, this gave us a significant thrust. And besides this, we put in place the increases that we had mentioned at the beginning of the quarter. and in the last call I mentioned that there would be a 6-7% price increase in the quarter which did materialize. Another aspect is the export of slabs. We exported 35,000 tons of slabs and 32,000 of tin plates. By adding all of this and if you bring together these factors, this is what led to to our revenue results that are very similar to other quarters. And that's the performance of CSN. Now, to speak a bit about prices, to speak more in depth about prices, we had a drop of 29%. And for the year, the drop was 15%. Our market projection in general terms is that flat steel will close at 10 or 12% of the year, long steel at 0%, and if we break this down further and to give you more color on our business, the industry, a drop of 4 to 6%, automotive is still... Unknown factor, it can be better than the 40% announced. Distribution, we're quite optimistic, 5% to 10% of drop only, and civil construction practically stable. Well, speaking about civil construction, CSN has an umbilical relationship with this market. and besides everything that I say of having a focus on the domestic market working on added value fragmentation not putting everything in the same basket and working with geography in civil construction we can work with long steel and cement additionally and all the sectors perform this year in a very satisfactory fashion And the outlook is to end the year with a zero drop in civil construction and perhaps a growth in some sectors. As part of these sectors, the more relevant, that of packaging, for example, which is very relevant, or the food sector and the chemical sector. We're working, as we did pre-COVID, we're working at full steam. and highway implements or agricultural implements that had a drop of 30% at the beginning of the pandemic have reached levels of usage of 80 to 90% heading to the fourth quarter reaching 95 to 100% and consumption sectors such as the white lines with a change of consumption habits as people stay home more The sales were practically normal during the second quarter, with an excellent outlook for the third and fourth quarters. The only sector that still brings down the demand for steel, and CSN has a relatively low stake in this, in the second quarter was 5%. In the automotive sector, they have said the drop will be 40%, but we had 60,000 vehicles being produced, which isn't so bad. Perhaps in the third or fourth quarter, this will go up to 80%. And machinery and implements speaks about ending the year at 90%. I wanted to give you more color on these businesses because this is what will guide our second semester. The outlook is very good when it comes to the market. Thank you, Martinez. To make sure that I have understood about prices in the domestic market, In distribution, the prices are 7% higher than they were in the first quarter. And do you foresee the possibility of further increases? The increase was 10% in July, Daniel, for distribution. On September 1st, we're going to have a new price increase for distribution. And depending on the product, this will vary between 10% to 12.5%. This is a new increase that of July has been fully put in place. For you to understand this better in terms of premiums, if you think about it, BQ. And there are two accounts that I will share with you. One on the table and what is happening in China. China has even bought slabs from Brazil and the BQ reached $500 in China. Let's imagine that the variation of BQ is $470 in China to $500 with a fixed exchange rate and a price domestically of $2,800. Without that 10% increase, that premium will be from 8% to 12%. And the September price increase is more than rational when it is applied. And there's a favorable demand-supply ratio. The plants are working at levels of 750, 800,000 tons. There is no surplus in terms of surplus and demand. and we should have a normal export and the dollar at the level it is will allow for stronger exports. Therefore, the scenario for price correction is fully favorable for September. I don't know if this has remained clear. Once again, the price increase in July has already been implemented and it is not in our price release, Daniela. Our next question is coming from Mr. Carlos Villalba with Morgan Stanley. You may proceed.

Yes, hello, and good morning to you all. Thank you very much. So my first question is, my fellow maybe, coming back to your statement, they want about $204 million change in working capital. And then, coming back to the balance sheet discussion, the expectation The company has to be able to reduce debt and net debt to $23 billion and three times by the end of next year. What annual price are you forecasting in these numbers? Are there any subsequent increases in domestic prices? Thank you very much.

Thank you for your question. Now, regarding the cash flow and working capital, as I mentioned in the presentation, we had significant variations thanks to intentional initiatives. We carried out some activities during the quarter to increase the liquidity in terms of the inventory, the finished product inventory increased, but we have taken actions to reduce the margin in parts and raw material. But presently, we have a higher inventory. When it comes to the liabilities, we have a significant lengthening with suppliers We negotiated with those that, of course, can work with us, especially international vendors for coal. And this has helped us significantly in terms of our cash flow. When it comes to our receivables, we have the fortune of having receivables in mining with confirmed letters of credit. And so these receivables are a very liquid currency. In some, we have no cost whatsoever. In others, we have a low financial cost. And that is why we have that significant cash flow. What helped mostly were those activities of support from the government towards liquidity, a deferral of taxes, and race and social security contributions. All of this helped us. It is this set of actions that allowed us to have that working capital that has helped us so significantly. When it comes to our forecast, what we have in terms of iron ore is the consensus curve. It's a consensus of the analysts that the coming year The projection will be of $75. We're not inventing anything. We think these figures are conservative at present and the other assumptions as well in terms of exchange rate. This will be the market exchange rate. Forcing the focus survey of the central bank and the price of steel. We're working with the present day prices. And this is what has been included in our forecast. We would like to remind you that should you wish to pose a question, please press Start 1. Our next question. Vincent Chagos from Goldman Sachs Good afternoon to all of you. Thank you for taking my question. I have a question for Martinez regarding the steel supply and demand situation. You spoke about the general activities of the sector where activities came to a standstill and now the demand is surprising you. So, what will happen with the resumption of this activity? Will this increase the competition for prices despite having the parity that you have? And the second question refers to mining. We have seen an increase in volume, but the cost per ton also increased. And there's that concept of idleness that was put in place during the first quarter. But why has the cost increased while the quality has decreased? If you could explain this. Good morning, Tiago. The accounts that I have at present for capacity, we have Uzi Minas operating with a blast furnace. Arcelor also operating with a blast furnace. They have announced the resumption of a blast furnace dedicated to exports. GERDA working with long steel and others. So what they're going to do is quite restricted and CSN. If we bring together all of this installed capacity that is operating, according to my accounts, the supply of steel will be of 750,000 to 780,000 tons per month, which is a supply that can fulfill the market at present. Additionally to this, we have two players in the domestic market that supply slabs. The Thin Steel Market and another that can also supply slabs. and we have the possibility of the resumption of the glass furnace from UC Minas and CSN. So supply and demand is an important curve where we can implement a price increase. It is not a hurdle to already have that price increase in September. All of this will move because of the demand in China. The increase in September has to be implemented fast and it has to go throughout the entire value chain. It's a Thank you for joining us. The idealness and the value chain and we will do whatever we can in our mix to maximize value in that quest for that figure that is mentioned by Marcelo, that idea of resuming profitability of steel by $100 per ton. This is an idea that we have. It is not a forecast, but this is what we're seeking. I don't think this will be an obstacle or a hurdle. Does that respond to your question? Yes, thank you. That has been very clear by clarifying what is happening in mining and the sequential comparison of prices of the second quarter with the first quarter is very useful. The first quarter had distortions because of the high cost of idleness. These costs don't refer to the merchandise sold. Now, another point is that we also have an increase in the cost of the product that is purchased. We bought iron ore at a higher price, and of course, this makes the cost in Hawaii somewhat higher as well. But this adds to the margin. What is more relevant in this discussion is that our cash costs for production stood at $17, and this is a transition cost. This is not the cost that we would like to obtain in the second semester with volumes going back to what we had last year, $10,000 per tonne. This will dilute our fixed costs and we will see an evolution, a positive evolution in costs. That'd be what we saw in the second quarter. Thank you, Marcelo. So there's no tripping issue and my follow-up. You have the figure of the island ore for third parties, which is the percentage for the second quarter. We stopped doing this because we weren't working according to the benchmark. We're trying to be transparent and also protecting strategic information, such as the purchase. of products from third parties. This is not a market that will change a good deal year on year. It will be very similar to 2019. So it's only this transition going towards higher volumes in the second semester with the cost that we had last year, yes. The next question comes from Tiago from Bradesco BBI. Simply a quick follow-up with Martinez, the same question that Tiago has already posed, the demand and the steel price mix. So you are already selling at $2,850,000. And this is the price that you are working with after the increase in July. And with those $2,850, you still have a negative result of 9%. That's it, Tiago, exactly that. The present-day price of PQ without peace and coffee taxes in the domestic market is $2,800 to $850. If we think of BQ in China at $470, $500, this premium is negative between 8% and 13%, and that is why the increase should be from 8% to 12% in September, depending on the product. If we don't have this premium, we have to be more cautious. We want to work more with the market and not allow penetration for imports and for the industry. Good question. In the industry, and I had forgotten that in industry at large, with the exception of some clients we have a contract with, we have a very small share in the automotive market. We work with 10%. in the automotive market for August. And, of course, we have this difference because there is a delay in the implementation. Otherwise, the spread of distribution for the industry will be much too strong, and we will begin to have a confrontation of distribution channels in industry. It's very hard to work with that. And on August 1st, we will have an increase in GAVA aluminum that is being invoiced in Brazil. And the increase will be for civil construction and distribution for the white wine industry. And for the increases for long steel, I forgot to work about and speak about long steel. In Longstreet, we're working at full steam. It is the smallest of our markets. But we have 20,000 clients that are registered, and every month we sell to 10,000. And every month we have 8,000 clients, month after month. I sell less to more clients, so the increase will be about 12%. Last month, the increase was 6%. This month, another 6% price increase. Six and six, that's it. And long steel, the average sales per month, they're in our balance, 18,000 to 19,000 per month. In Brazil, once again, we haven't taken into account Germany here. Thank you. Thank you, Martinez. The next question is from Leonardo Correa from BTG Pactual. Good day, gentlemen. Good afternoon. The first question is to Martinez. Martinez, there is a great discrepancy in the data. The large Eneas Garcia Diniz, Luis Fernando Barbosa Martinez, Rogério Bautista da Nova Moreira, Harry Morgenstern Which is your reading of this movement? I think there's a big gap in the data. And a question for Marcelo. You spoke about the guidance for iron ore for 2020, 33 to 36 million. What happens with 2021 and 2022? This would be very helpful. Thank you. Leo, good morning, and this is a very smart question. It's hard to understand what is happening for those who don't closely follow up on the market. There has been an increase in apparent consumption during this crisis. Clients were hesitant in terms of planning and scheduling. They're buying only what they need, and as distributors had inventory and had to sell products, They began to sell in fragmented amounts. It was easier for a client to access a distributor, purchase smaller amounts, and wait a bit. What happened simultaneously at present is the following. There was this certain relay CSN did not stop production. It was the last to stop production and there was a certain lack of planning in the industry. Besides losing the inventory, they did not plan correctly. The millers stopped production and clients had to resort to distribution as they had inventory. What happened in June? Distributors sold Ridiculous figures because everything was stocked with them. This dynamic of distribution and industry is normal whenever there is this crisis. I'm still here, Martinez. So this dynamic industry and distributor happens when there are market asymmetries. And this is what happens. In the second semester, all of this should go back to normalcy. I don't know if what I said is clear. No, that is great, Martinez. Thank you very much. Thank you for the question. Now, Marcelo, regarding the coming year, it's still too early, but the expectation is to resume our normal levels, the levels we attained last year in Uzi Minas. This is what we expect for the time being. This is where we're going to remain until we have the coming into entry of our project, initially with 10 million, and another 10 million beginning in 2023. This is the range of figures we're working with. That's excellent. Marcelo? Now the project of Is this incremental? Let me reformulate my question. I think your capacity is about 40 million tons without requiring investment. The ceiling would be 40 million tons. Could you add 40 plus 15? to get to $55,000. Now, if you could simply clarify this point, I still have some doubts regarding this. Yes, that's what it is. If you look at the consolidated figures, this is what we're working for, to put those $10 million incrementally. Now, what is going to happen within the company at gradual replacement of our center seed product based on the production of hematites to have a larger production of pellets. And the central plant during the coming years will have its production converted from hematites to etaburite. We're going to do this without having any drop in shipment or production. These 15 million are only a marginal value. We have several funds and initiatives for this to happen, and this is what we're projecting. Very well. Thank you very much. Thank you, Marcelo and Martinez. The next question comes from Gabrielle Galvan from Pugliese, Suisse. Congratulations for your results. My first question refers to the resumption of the Blas Fernas II. Is there a plan for this resumption? And if you could share with us what it is that you are expecting and The second question refers to possible extensions to enable you to reach that leverage of 3.75 in 2021. Are you planning to announce any expansion in the mega line of galvanized products? Are you going to invest more? to have greater availability of pellet seed, as you mentioned recently? This is my second question. Regarding the blast furnace tool, we're working on this so that it will be ready by the end of the year. The preparations include the cleaning and the purchase of refractory material. We have already begun, and this will be ready before the end of November. Everything will depend on the demand, and the cost is between $10 and $15 million. It's not such a high cost as mentioned formerly. When it comes to the new investments, we have a broad range of opportunities. This depends on the expansion of mining. Mining does have a project of $10 to $5 million. Thank you for joining us. If we want to go back to being self-sufficient and generation is something that we are considering for the future, logistics structure as well, a consolidation in the cement sector. Once again, these are opportunities that we're always considering. Very well. Thank you very much. Thank you. As we have no further questions, we will return the floor to Mr. Marcelo Ribeiro, the IR Executive Officer, for his closing remarks. I simply would like to thank all of you for your presence at the call. We have more than one hour of discussion. We hope to be able to talk to you again. Thank you very much and have a good afternoon. The release conference call for CSN ends here. You can now disconnect and have a good afternoon.