Gerdau Pref ADR (GGB) Rallies 2.51% to 2025 High on U.S. Steel Tariffs, Institutional Buys

Gerdau Pref ADR (GGB) surged 2.51% intraday on October 8, 2025, reaching its highest level since October 2025, driven by renewed investor confidence in the U.S. steel sector and strategic corporate moves. The rally reflects a convergence of trade policy shifts, production capacity expansions, and institutional sentiment shifts.

Recent U.S. steel tariffs, part of a broader protectionist agenda, have directly benefited Gerdau’s North American operations. These tariffs have bolstered domestic demand for steel, positioning Gerdau as a key beneficiary in a market where foreign competitors face higher costs. Analysts highlight that while the policy creates short-term tailwinds, long-term risks from retaliatory measures and raw material cost inflation remain. Institutional activity has mirrored this duality, with firms like Macquarie Group and Disciplined Investments adding to their stakes in September 2025, while others such as Natixis Advisors reduced holdings earlier in the year.

A strategic pivot toward green steel has further underpinned investor optimism. Gerdau’s $400 million investment in a Brazilian hot-rolled coil line, announced in August 2025, aligns with global decarbonization trends and positions the company to capture growing demand for sustainable materials. This initiative, coupled with the company’s low P/E and P/B ratios, has attracted value-focused investors seeking long-term exposure to an undervalued industrial player. Analysts from UBS and Scotiabank have separately adjusted their price targets, reflecting diverging views on the balance between near-term challenges and structural growth opportunities.

Financial performance in Q2 2025 showed mixed signals, with adjusted profits declining 9% due to rising iron ore prices and operational inefficiencies. However, Q1 results demonstrated resilience in U.S. revenue, driven by the tariff-driven demand surge. The upcoming Q3 earnings report on October 30 is expected to provide clarity on cost management and production efficiency, with market participants cautiously optimistic about margin stabilization. Short interest in GGB has fallen by 14.81% since September 2025, signaling reduced bearish pressure and stabilizing sentiment.

Analyst ratings remain split, with UBS upgrading the stock to “Buy” in August 2025 and others maintaining “Hold” due to sector-wide volatility. The stock’s 2.30% dividend yield and 7.03% earnings margin offer appeal to income-focused investors, though cyclical risks in steel demand and macroeconomic headwinds temper enthusiasm. Institutional ownership trends and green steel progress will likely dictate the next phase of GGB’s trajectory as investors weigh near-term gains against structural industry challenges.