Companhia Siderúrgica Nacional (CSNA3) Earnings Call Transcript

Good morning, and thank you for holding. At this time, we would like to welcome everyone to CSN's conference call for the results for the second quarter '26. Today, we have with us the company's executive officers. We would like to inform you that this event is being recorded [Operator Instructions] you can access this event at www.csn.com.br/ir where the presentation is also available. The replay of the event will be available soon after closing. Before proceeding, please bear in mind that some of the forward-looking statements herein are mere expectations or trends based on the current assumptions and opinions of the company's management. Future results, performance and events may differ materially from those expressed herein which do not constitute projections. In fact, actual results, performance or events may differ materially from those expressed or implied by forward-looking statements as a result of several factors such as the general and economic conditions in Brazil, interest rates, exchange rate levels, future rescheduling or prepayment of debt denominated in foreign currencies, protectionist measures in the U.S., Brazil and other countries, changes in laws and regulations and general competitive factors at a global, regional or national basis. We will now turn the floor over to Mr. Marco Rabello, Investor Relations Executive Officer, who will present the company's operating and financial highlights for CSN for the period. You may proceed, sir.

Good morning, everybody, and thank you for participating in another CSN conference call. We're going to present the results for the second quarter '26, a very important period for the company where the company was able to overcome all the adversities relating to costs and raw materials to offer vigorous growth of EBITDA in the previous quarter and in comparison with the quarter of '25. This 5% increase in consolidated EBITDA is a result of better operational performance in all segments, sales and the commercial activity. You also see the importance of having a diversified operation without bending to the pressures of a specific sector. Financially, another important point was the release of cash flow and the positive cash flow during the period increase compared to previous quarter. Now this movement reflects the evolution of the projects that the company has been working on since the beginning of the year to resolve the capital structure. With this, the expectation is that the company will gradually evolve to a more sustainable cash generation going forward. We're very satisfied to announce the conclusion of the new 2030 bond with a leverage of more than 77%. This shows the success of the operation and the credibility that people have in the project and movement of the company. It's important for the company to calmly carry out its projects. For example, the divestment of assets, the conclusion of P15 release of working capital in the company. After the conclusion of these projects, the company will be able to adhere better to its long-term goals. Let's go on to the highlights of mining. In the second quarter, we reached the fourth best sales result in the history of the segment. This is very relevant when we see that the operation was in shutdown for 15 days for work in the mine and elsewhere throughout the quarter, we had 2 of the best monthly performances in the history of CSN with May and June as the strongest months in the group. This shows a high level of efficiency that the operation has achieved. This performance was important to offset the increase in logistic costs and the exchange rate due to the Middle East strike. Because of the exchange rate, the EBITDA of mining in the second quarter was lower than in the previous quarter, but even that way, guaranteed profitability above 30%, showing the resilience and profitability of the operation. In mining, after a -- I'm sorry, in steel after a challenging year, we became successful after the antidumping measures approved in March. This allowed for a significant entrance of material in the Brazilian ports, allowing the Brazilian producers to have a greater stake. The improvement in the commercial environment also allowed for a price readjustment. In the quarter, we began working with higher prices. The result of this more favorable dynamic with 10% of expansion of sales in the domestic market more than offset the slowdown in steel. Another important factor for the recovery of steel was the excellent results achieved by subsidiaries abroad. Our SWT subsidiary in Germany had the best commercial performance since 2022. And the American operation, despite the difficulties imposed by the tariff war has also been able to deliver stronger results compared to last year. The combination of these factors have allowed for a strong expansion of results, allowing the company to offset the pressure on costs to go back to the double-digit performance. Now steel will be an important factor of results for the company this year. In the cement market, we continue to have exceptional performance. The company was once again able to deliver the highest EBITDA in its history. This is the second consecutive quarter of record, showing that the company is growing with resilient demand, higher prices and a very assertive commercial strategy. This EBITDA record in the second quarter occurred with maintenance dropdowns for the period, showing that the performance can improve further. The strategy that is being implemented of prioritizing risk instead of volume is important because of the sound performance of the cement market. We have a growth in salary and a new dynamic in the real estate market because of the [ My House, My Home system ]. This allows profitability to be above 30% with an efficiency level above that of the sector. If we think about the results for the last 12 months, EBITDA has made a significant evolution compared to last year, reaching BRL 6 billion with an even greater growth perspective for the rest of the year. Very similar to steel, the cement is an important factor for the results of the company in terms of the sale of the asset last Friday, as informed in a material fact, we have received binding offers that are unique for the Brazilian market and should lead to a very interesting valuation. Finally, if we look to the right of the slide, we have a highlight in logistics and energy and logistics. This semester was also excellent with the second best EBITDA in the company's history. The seasonality of a drier weather and efficiency of the logistic model were fundamental to resume the work of cargo with a margin of 45% in the quarter. This extraordinary performance shows the strength of our asset portfolio and should unharness the sale with a sale of the minority sale Infra of CSN, and we have a very high number of NDA side and the expectation is that the end of the month, the company will receive nonbinding offers for a minor share in this company. In the sector of energy, we had a favorable dynamic in the sector. It ended up being thrust by the retroactive recognition of revenue of a favorable decision related to the Jacuí Hydroelectric Power Plant, whose commercialization had been suspended since October of 2025. Now energy returns to normalized levels in the coming quarter because of this. Let's now go on to Slide #3, where we present our EBITDA results and margin for the second quarter '26. We see the favorable dynamic of the quarter with a higher EBITDA in the year-on-year and quarter-on-quarter comparison. We were able to neutralize the problem with logistics and deliver strong commercial growth in all sectors. If we look at the graph to the right, it becomes evident of the importance of having a diversified assets, steel, mining, logistics and energy, we were able to offset the negative effect of a higher cost in mining. On the following slide, we present the company's investments where we can see an increase of 26% in CapEx vis-a-vis the previous quarter and a 6% on the year-on-year comparison. We have advanced in civil construction related to the P15 project of mining besides the disbursements carried out for maintenance in mining and cement. In Slide #5, we analyze our working capital, where we can see a significant reduction in the quarter-on-quarter comparison related to the lower inventory levels of the company. This is in line with the project that has been put in place since the beginning of the year to release cash and normalize the volume of the operation, especially in steel products. We expect this trend to continue in the second half of the year. This will improve cash conversion and we will have a higher balance of recoverable taxes also contributing to this new working capital for the quarter. In the next slide, we show you the results of our free cash flow, where we can see a positive flow of BRL 808 million, an important reversion after some negative quarters. Now the release of working capital and the fundraising were the main factors for this performance. Now this has helped us offset the substantial debt amortization and amortization of prepayment contracts during the period. For the coming quarters, the company will continue to move forward in an operational improvement of these results in a continuous release of working capital and in new contracts for prepayment to maintain the impact of these operations neutral. On Slide #7, we show you the situation of our indebtedness and leverage as well as the behavior of the debt throughout the semester. To the right, you see a buildup of net debt because of the amortization of prepayments of iron ore contracts, the exchange rate on contracts and an effect of BRL 500 million in Transnordestina. This has more than offset the cash generation recorded in the period. To the left, we went from 3x 6x to 3.49x this quarter, a minor increase that does not represent a trend. Our focus, once again, is on resolving our capital structure with the divestment of assets advancing very quickly and new initiatives that could result in important activities. besides the increased operational results that we have. Going on to Slide #8, you see our indebtedness profile. We observed that we have a high level of cash despite the fact that we have reduced our debt. You can also see that the main maturity terms are for banking debt where CSN has been able to manage this properly. When we look forward in 2028, we have just addressed this with an adherence of 77% of shares sold. We're carrying out all efforts to lengthen our maturity terms to have a more structured payment of debt and to allow for the growth of our operational results. On Slide #9, you can see the pro forma of our new structure for debt. The expectation is that in short time, CSN will become ever lighter, not only to be able to face future maturities, but also to harness several new projects that will completely transform the potential for cash generation of the group. With this, we conclude the analysis of consolidated results, and we go on to Slide 11, where we show you the results of our steel segment. You see the results of our commercial area with a growth of 17% in sales for the quarter, driven by the domestic market and the foreign market as well. In the domestic market, we have the first effects of the antidumping regulation with better initiatives for local producers. Now the result was an annual growth of 10% in growth in the domestic market with a mix improvement in all of the markets we are present in. In the foreign market, we had the highest volume since the first quarter '23 with the consumption of steel recovering in Europe and United States also increasing its imports. When we look at the following slide of production, we see that the result shows the impact of the shutdown of one of the blast furnaces and the reduction of stock in the Vargas plant. To the right, you see a slight increase in the plate because of the cost of energy and raw material during the period. Despite this momentary pressure, we have a significant growth in the performance per ton with a consistent evolution in the market. Now this becomes ever clear when we go on to the financial performance of steel on Slide 13. In the graph to the left, we see an increase in net revenue and average price for the period. We have an intense commercial rhythm that has been recorded and the resumption of activities abroad and a more favorable dynamic of prices in Brazil after the readjustment that we put in place in April. Going to the graph to the right, you can see a strong recovery of EBITDA during the period with profitability back to 2 digits. The most difficult phase of these times is something we have left behind us. We still have a great deal of efficiency and value to add to the segment of steel. Now the results of this quarter point to a sustainable recovery for steel and for the entire group. Let's now go on to the Mining segment. On Slide 15, we see the result of production and sales. In the production graph, we see the effects of the 15 days of shutdown with a lower volume of sales, we had a drop of 5.5%. On the other hand, when we look at the quarterly growth, this positive seasonality of the drier period offset the days in which production came to a standstill. We see a stronger pace of sales with the company recording the fourth best result in history, even with the 15 years of shutdown, showing the robustness and efficiency of the logistics infrastructure of the company. The result also shows the efforts deployed to recover the inventories of iron ore. Regarding the financial performance on Slide 16, despite the solid sales volume and iron ore prices remaining high, net revenue was impacted by foreign exchange appreciation and higher freight rates pressured by geopolitical tensions between United States and Iran. Net -- the unit revenue was $18 per ton. It increased to 20% less than the first quarter of '26 and below that recorded for the same quarter last year. Regarding EBITDA in the graph to the right, we see that this drop occurred in a period marked by operational excellence, showing the impact of logistics and exchange rate in this segment. Despite the results in this quarter, even in a quarter marked by logistic costs and foreign pressure, the company's profitability remained resilient with an EBITDA margin above 30%. In the following slide, we see the adjusted EBITDA in the second quarter of '26 compared to the previous quarter. We see a clear and direct impact of maritime freight during the period and the effect of exchange rate in the iron ore. On the other hand, we had better volumes and costs, helping us to attenuate these effects. Let's go on to analyze the Cement segment. On Slide 19, we see the sales volume. Here, we see a more timid activity commercially due to the scheduled maintenance events in several of the plants during this period, and the strategy continues to prioritize volume. Now there was a dynamic that was favorable in the cement market without having to enter a price war. We continue to see resilient demand and the focus is to have sustainable performance for the operation. In the next slide, we see the financial performance with a growth of revenue of 14% in quarter-on-quarter comparison and 10% compared to the second quarter of '25. This shows the readjustments put in force in the last months and a more favorable market. On the part of EBITDA, we are very satisfied to announce a second consecutive record going beyond BRL 420,000 and a margin of more than 30%. All of this profitability shows the positive moment begun by the operation and the ability to make an asset profitable despite the price pressure. We see an operation that is ever more competitive, and we can see the competitive edge of CSN Cement that has more streamlined plants and a very efficient management. We go on to analyze the Logistics segment on Slide 22. We can see in terms of net revenue that the quarterly growth is due to the drier period and the transport of merchandise, everything was driven by the subsegments of the multimodal segment. We had an increase of 3.1%. And this is an evolution we have observed in the last quarter besides the synergies captured in the multimodal segment. To the right, we see that this was the second highest result of the segment advancing in terms of efficiency and cost control, maintaining profitability at a very sound level above 45%, showing the operational resiliency of this process. Finally, on Slide 24, we see the financial performance of the Energy segment. There was an performance in the EBITDA and net revenue. There was an extraordinary effect in the period because of the retroactive recognition of revenue from the Jacuí Hydroelectric Power Plant that had been contingent on the balance sheet since October '25. The expectation going forward is to have ever more stable results in coming quarters. With that, I would like to end the presentation on the segments, and I invite Helena Guerra to present the ESG highlights.

Good morning, everybody. I will begin once again showing that we repeat advances in our earnings call. This, of course, is part of our strategy. We're improving in risk management, value generation. And we treat the system as a set of initiatives that have to undergo operational improvement, overcome regulatory risk and contribute to the long-term competitiveness of our company. The results for this quarter reinforce this position. In governance, we had an important evolution in terms of our market ratings. The FTSE rating went from 3.7 to 4.2. CSN and CSN also had increases, consecutive increases in the quarter. CSN and CMIN were awarded the industry leaders in sustainalytics, ESG risk rating and the evolution of EcoVadis that went from 74 to 80 points. With one additional point, we will be part of the gold category. So this shows the excellence of our management and the transparency of our controls and everything we do to mitigate regulatory risks. In terms of operational risks, we continue to move forward in our dams. We had 2 recognitions of competent agencies in terms of the characterization of the [ Ilha do ] dam and the B2A dam. And all dams have the declaration of conformity and operability. In the environmental management, we have complied with all of the obligations foreseen in this instrument. This thanks to the millions of invested in improving the environmental conditions of our plants. The expectation is that we will be awarded with operational efficiency. We continue to make positive moves in social and diversity, an increase in female representation in the workforce, an increase in female representation in the leadership positions, and we're preparing for regulatory systems that are ever more stringent. We have also published the 2025 impact report of the CSN Foundation with investments of more than BRL 48 million in social development helping thousands of youngsters throughout Brazil. So we're presenting consistent results and actions, which is our aim. And we want to continue to ensure that no risk can materialize. Everything we do according to this agenda will translate into efficiency, improvement of our competitiveness and the generation of sustainable value for our company. I will now return the floor to Marco. I will give the floor to our CEO, Mr. Benjamin Steinbruch for his remarks at this point.

A good day to all of you. Welcome to the earnings call for the CSN. I would like to quickly review the main points of each of our segments. Regarding steel, we have the initial positive impact showing a strong reduction in the volume of imported material, thanks to the antidumping regulation. In truth, this is the first time that we felt this benefit not having that unloyal competition that comes from the Asian products with a negative impact on the market not only for the steel industry, but in all industries that are set up in Brazil. It is impossible basically to compete with Asian imports. It's up to all of us to react strongly against this so that we can protect new investments and protect our production and protect employment, of course, which is -- what is of greater importance here. So we need to strongly continue on with that antidumping policy. ensuring that we don't have them competing in the Brazilian market. We had an improvement in the competitive environment, resulting in a strong growth of more than 10% in the domestic market with room for a recovery of prices. And this also holds true for the foreign market. We have significant evolution with a higher consumption of steel in Europe. Sales increased 36% in the year, and this is the company's best result since the first quarter of '23, once again, driven by the results of Germany, Portugal, Spain and of course, United States. now the first signs of recovery in profitability with margins going beyond 2 digits, 10.5% for the second quarter. And the expectation is for a stronger second half of the year, a maintenance of favorable volume for volumes and prices as well. We are increasing production and the idea is to have a price increase as well. This will allow us to be more competitive and advance in the product diversification. We're active in practically all segments of the economy. And this allows CSN to have a differentiated capacity and a better expectation for the second half of the year in steel. Regarding cement, we continue on with strong demand driven basically by My House, My Life projects and some infrastructure projects. This favorable scenario has also allowed for a cost recovery in the last month despite, of course, the exchange rate and the increase in freight that have a strong impact on cost. The strategy is to prioritize value over volume, and it is a very assertive strategy. We have been able to make the operation profitable. This was a second EBITDA record, a consecutive record this quarter, showing the strength of the operation with streamlined plans, integrated management and a very efficient commercial strategy. Now the outlook for results is even better in the second half of the year with the evolution of price and volume. We're rigorously delivering what we committed to do at the beginning of the year. we had an evolution in net revenue, margin and EBITDA. We're working full steam, and we simply did not have a better performance in the second quarter because of a nonscheduled maintenance in June that limited us somewhat. Otherwise, this would have been a more exceptional quarter because of the recovery that we observed vis-a-vis previous years, quarter-on-quarter. In the last 12 months, we are complying with our results and presenting better figures quarter after quarter, and we do believe we will continue this way until the end of the year. In logistics, that has become a very important segment for us. It was the second best EBITDA in history recorded this quarter because of the dry period and an increase in the cargo transported. Now the strength of our assets is the best differential to capture synergies of the last acquisition we just carried out. and cement has been improving quarter-on-quarter, and we believe that logistics will follow suit in this improvement. It has been performing better quarter after quarter. In energy, we had record results and an extraordinary effect, the recognition of retroactive revenues from the Jacuí hydropower plant. Those values had been in contingency since October of 2025. Regardless of this result, the segment continues to be strategic for the group, guaranteeing a high production with high profit for the group and very forecastable revenue. In terms of consolidated terms, we have a growth of 5% EBITDA for the quarter and for the year. This points to the strength of the operation in a period of strong pressure because of freight and raw material. It shows the benefit of having a diversified operation and a robust asset portfolio. In terms of sales, we see the excellent commercial environment during the period, not only for sales, but also for production. If you analyze all of our activities, that had an improvement in volume in net revenue and an improvement in margin. We're working strongly on the operational part and expect a very strong second half of the year in all of our assets. We will continue to increase production, increase sales. And with this, have better profitability, always maintaining margins or improving them. This is a goal that we set forth of creating value even with a onetime reduction of delivery in some of the markets. Now the release of working capital sells the evolution of the project to reduce our level of inventory. We're working strongly on this. At the beginning of the year, we wanted to reduce our inventory from BRL 3 million to BRL 1 million. We're very close to that reduction. We think we can do this in the second half of the year to do this better in terms of raw materials, equipment parts and in finished products and products under production as well. Our effort is geared to this improvement in operational performance. And I would like you to analyze each of the segments to see the considerable improvement that we present in quantitative terms and profitability and the work carried out in the reduction of working capital to enhance the company cash. To conclude, we were very successful in the change complying to the request of our creditors to show this movement of part of our debt, rolling the rest of the debt. We continue on with this process of selling our assets, the cement asset very clearly following the schedule that was set forth in March. We are now receiving the binding offers that will be analyzed and debated with the people to ensure an expeditious movement and the minority sale of logistics that we're carrying out a reallocation of assets. We have nonbinding proposals in a number much higher than we had expected due to the quality and the moment that these assets are in. I do believe this will be a very successful project. We're deploying enormous efforts. I would like to thank all of our employees because of the challenges that we have set forth not only in production, but also in sales and in profitability. If you analyze each of these mining quarter-on-quarter achieving records, cement every quarter also attaining records, logistics infrastructure and energy with their own records. And finally, steel, this result of the second quarter with a general improvement in figures, and I thank those working at the steel plant, enabling us to have this strong improvement in the second quarter. This is what I wanted to share with you. Thank you all. I return the floor to Marco Rabello.

[Operator Instructions] The first question is from Daniel Sasson from Itau BBA.

My question is for Martinez. Martinez, we have seen the company margin going back to a double digit, a benefit in the drop of imports, thanks to the antidumping regulation. Mr. Steinbruch spoke about the importance of these protectionist measures. Now which part of this is a structural recovery of market share, which would be a sustainable margin for the steel business if the imported margins stabilize at present day levels, which is your vision for the second half of the year, if this margin will further improve? My second question refers to the capital structure, if you can give us further details in the negotiation for the cement plant, you have received binding offers and from three different groups according to the news, which are the next steps? Of course, without revealing the value of the offers, are they very close to what you think the asset is worth? Are you considering the sale of 100% of the cement unit or only selling of the control and keeping a minority share in the asset? So if you could comment on this path towards deleveraging in the future, what comes from operational cash or the disbursement of assets?

Daniel, you will recall that in the first quarter call, I mentioned that I was seeing signs of transition of imported market to domestic production, the search for added value and that we were foreseeing a significant improvement for the second quarter. What happened in the second quarter in Peru? We speak a great deal about value over volume. In our case here, it was value and volume. We grew 11% in the slab market or flat steel market for the domestic market, a growth in the higher added value products and the price that still has room for recovery. We had an increase of 4% approximately. To give you an idea, if you look at the BQ, a product that in our portfolio is not the main one in terms of margin. It has a gross margin of BRL 400 per ton when we go to the higher added value products. Free painted products, we have margins value varying between BRL 1,000 to BRL 1,200 to more than BRL 2,000 in tinplate. So we have all of these choices in our portfolio. This is an important data that we captured in the second quarter, referring to imports to give you more color to what Benjamin said. Imports last year, we ended the year with an import penetration of 25 million tons for 16 million in the market. This year, we already observed the following until June, we had practically 1,800 tons with a trend towards reduction, which means being very practical that 600,000 are part of the domestic market of the 600,000, 70% belong to CSN. The material we produce for civil construction, the white line and distribution. In the call in the first quarter, I said we would recover from the market about 1.5 million to 2 million for the domestic market this year. That's a given already. This means that imports -- the import penetration should be around 15% or 17%. This reinforces our strategy. From the viewpoint of demand, although we have observed negative comments in the market, we have a relative balance of several sectors helping CSN offset our portfolio. If you -- well, if you're only going to speak about the agricultural market, there is a temporary drop it may resume. It is compared to other markets. We have a more stable white line market. The assembly market despite the number of imported vehicles coming in had a 10% growth in production. And in civil construction, it has proven to be very resilient despite the interest rates. This is something very peculiar to Brazil. Brazil has learned to speak with high figures for inflation and interest rates and continues to grow. So the main challenges for the third quarter for steel, first, operational excellence. Our business is moved by cost, and we're heading to get to a slab at [ 3,100 ] BRL 3,000 per ton. And in our day-to-day, this is our mantra to seek out this cost. Otherwise, we're out of the international market, and it will be very difficult to compete. Regarding margin recoveries, from the first quarter, we went from 7%. We got to 11% in the second quarter, and we are working in a scenario of reaching 15% or 17% in the second half of the year, recovering volume and margins, we can reduce some discounts, align some prices from 5% to 7% now in September. This would help a great deal in recovering the higher 2 digits. Another point mentioned by Benjamin and Marco are the inventory reductions. We want 500,000 inventories in-house. This is very important regarding our cash flow. And finally, we want to capture 600,000, 700,000 more tons that will migrate from the imported products to the domestic market. This is data that we're working with. From the viewpoint of a variable that is not under our control, the antidumping measures, what would be interesting to say here in the antidumping measures, we obtained practically everything we requested. It took some time, but there you are. We wanted antidumping against China and all products. We're missing this for hot draw. We had meetings this week, next week, and we want to include antidumping against the Chinese in the month of August and September, that would be fundamental for us in other products such as tinplate, which is something very peculiar for CSN, there's something that will happen. Antidumping that has been detected incredibly enough against Germany, the Netherlands and Japan. The margins went from $300 to $600, and we're not even speaking about China. We also hope to implement this antidumping. And in CSN, we will be highly competitive because of this. Obviously, the government has to be more attentive. It's not only a problem of steel. As Benjamin mentioned, the problem is for all of the upstream chains, all of Chinese products. The automotive market, we don't need to mention a sector that is not perceived that is being set up in Brazil, the white line sector. We have companies like IDEA and LG that do not produce anything, but have everything coming from China. And other sectors, we don't need to mention machines, implement and others. So this structural situation, the great message that Benjamin mentioned, we're going to try to fight against these imports in any way possible. We have a portfolio. There is that variable -- we are receiving material coming from Vietnam and Korea, for example, and we don't even know if this is a problem of circumvention, if it is part of the trade, and we're going to speak to the IRS to see if they all have the right form. What we can create in Brazil is a technical barrier, therefore. So Daniel, I'm at your disposal, should you need more detail. This is a scenario we imagine for the third quarter, optimistic, but very realistic in terms of what is happening in Brazil.

Daniel, this is Marco Rabello. Going on to your next question. Yes, we did have a material fact this week stating that we received the binding proposals for the sale of cement. Obviously, the media conveys a great deal of information. It's very difficult to manage the media information, but to benefit this competitive process where we hope to get the very best to benefit the company and the creditors. We cannot share too many details with you a number of proposals and amounts. This is a competitive process, a bidding process. Now once we have identified who will be the buyer and which is the final value and the conditions agreed upon, we will be able to disclose this. We're still not at this point with -- for such a precise definition to inform anything to the market. Well, we do have regulatory restrictions. But as soon as we have precise information, we will inform the entire market in a more homogeneous way. What we can comment are the excellent results that cement has delivered this year, 2 excellent quarters with record EBITDA despite the shutdown for maintenance. So this is a unique asset, a unique company. And we think we will have the valuation that it deserves to carry out this operation that will be very important for the group's deleveraging. A broader question about deleveraging going forward. To recall what we said at the beginning of the year, our deleveraging plan is proceeding the schedule that we approved at the beginning of the year. We're following it very closely in all of our assets in infralogistics as well. CSN has so many assets. Some are nonoperational, but they're also very valuable. If we decide to sell them on, we may do this. But the most important path of deleveraging is to continue to have good sales and to focus on our operational performance, our cash generation. Martinez has just given us important information on the recovery that we see in the market in steel as well. This has to be sustainable for the company and for creditors. If all segments evolve importantly in terms of their results and cash flow, this is what we have been seeking, and we will have an important conversion in the 2 segments that have to deliver better results, cement and steel. It's important to mention in steel that we are thinking about strategic possibilities for steel, perhaps a partner, we continue on with this analysis. These are movements that will only add to a better profitability that we already observed presently. They will help us drive a better cash generation for steel. To answer your question, deleveraging will come through that sale that has been announced, but also through operational enhancements that we have been showing in the last few months. Another important point, Daniel, you're always asking about the cement sector that you cover. for the first time since the beginning of cement at CSN, we have average cement prices of $75 to $80. I was used to speaking of $55 to $60. Nowadays, if we imagine the first half of the year and compare it to 2025, we have an expressive recovery of prices, 17% to 20% recovery in price with an FOB price of $360, $380, which shows you, as Benjamin mentioned, that we do have a business that is ready for everything. Besides the operational excellence, the streamlined assets that we have, the low level of obsolete assets and the operational excellence at our 3 sites because of our capillarity and distribution in our 24 distribution centers and 32,000 customers, we're a bit removed from any market impact. And when we look at the market, we have nothing to complain about civil construction has proven to be very resilient to the interest rate. If you look at some developers at present, there are two of them, one that is high standard, another one selling My House, My Home. Real estate funding has increased 13% to 14%. The sale of new real estate is strong, 5%. What has decreased a bit is the number of launches. We obviously hope that this lower number of launches will not lead to a market hiatus going forward and that we can recover a margin in the infrastructure market. When we speak about results, the cement market lots results and the process is nothing but a detail. We're delivering a margin of 30% to 32%, double that of our main competitor in the domestic market. This allows us to be motivated and allows our teams to be very motivated.

The next question comes from Marcio Farid from Goldman Sachs.

Martinez, you have spoken a great deal already, but I'm asking for a follow-up. We have seen significant imports coming from Vietnam, hot coins. Now simply to try to understand if this is a one-off movement or if this is another circumvention and if this concerns you, what will happen in the second half of the year? To follow up on the questions of liability management, the focus presently, of course, is on cement. You briefly remarked on infrastructure. Now this speed to continue the sale of assets, will it be reduced. Let's imagine you sell off your cement operation and you will roll the 2028 bonds. Are you thinking of doing anything additional? Or will you have to continue to divest some assets or other assets in the group?

Thank you for the question once again, Marcio. The main point here in terms of imports is something that does concern us a great deal, of course. It was a struggle during these last 3 years and continues to be to work against these illegal imports. Now obviously, we cannot compete with any logic. To give you an idea in China nowadays, we have 247 plants. And of these 247 sites, there are less than 35% that have a positive margin. This is public information, and it's impossible to combat this. There's another point of communicating vessels throughout the world regarding steel. With the close of quotas that Europe put into practice by 50%. What happened by communicating vessels, what they stop sending to Europe, the only outlet from China that is open is Brazil. Now we have no other option unless we defend ourselves against this not only against China. We're speaking about Asian imports as a whole. To give you an idea in 2025, Vietnam was the largest importer of Chinese material, 7.2 million tons. It's obvious that we're very cautious because part of this material will suffer circumvention. There will be that derailing of trade -- we have the fraud that exists in the LCMs that we're also combating and we're working towards that. Now the government at present could be faster, but they are more attentive to this because as Benjamin mentioned, this is compromising employment, not only in the steel industry, but in other chains of production as well. So this scenario of Vietnam, we're fighting so that we can implement measures that will be approved. And to show that this material has to be laminated in Vietnam or Korea, but this continues to be a concern for us. About a more constructive scenario for the second half of the year, it's a given -- what is left from imports is an inventory that exists in the market. The lineup of ships that we monitor. Last year, it was 700,000 to 800,000 has dropped to 110,000. It's an issue of mass balance. Part of this volume, we will sell in the domestic market. Now these countries, Vietnam and Korea don't have an aggressive price such as China, so we can compete well with them. The only Chinese product feasible in Brazil is BQ in September, we will have antidumping against this even with other Asian materials. If we compare the materials, we can end up being quite competitive. Finally, we're increasing the production at our plant in Paraná, increase of 15% to 20%. It's working on products, pre-painted galvanized products. The 4 lines that we have in Rio de Janeiro, the Cava line, automotive line, although this is not our focus, we're benefiting from that growing market. And the lines of the plant are working with an order backlog that is quite interesting. So we have a constructive scenario based on facts and figures. And in the third quarter, we can speak about this once again, which I hope will happen.

Marcio, regarding your second question, what has changed that is important to change the average term of the company debt. We're going to be taking $1 billion maturing in 1.5 years. We have thrown it further ahead. Reducing pressure, which is important for the company and for creditors in general. This was part of the company plan since always to work with this liability management, this exchange. Nothing changes in the rest of the company. The hurry to sell off assets, the schedule that we have in the market, cement and infrastructure are two projects that we're working on in a parallel fashion. We're disclosing material facts. At the end of this month, we will receive nonbinding proposals for infrastructure. So we have a huge volume of companies concerned in delivering their proposals in cement. We have binding proposals, and we continue to look at other deleveraging alternatives. And despite the good operational results, what is more important is to continue to enhance the cash generation of the company. This does not change our strategy. All of you know the high interest rate we live within the country. Obviously, this impacts any company that grows that invests and that uses third-party capital. And CSN has excellent projects with high profitability, the iron ore project, the P15 or expansion in infrastructure and ports. These are projects with high EBITDA margins with very fast returns. and they are being duly executed and the capital structure of the group has already been adjusted. So the speed will not change at all. It will simply incentivize us to continue on with these projects.

Our next question comes from Matheus Moreira from Bradesco BBI.

We have 2 of them. One on cash generation. We saw a strong release of working capital, BRL 900,000, approximately helping you to offset CapEx and higher financial expenses. Now a part of this gain from the reduction of inventory at [indiscernible] Marco and Benjamin remark that you're working on reducing inventory for coming quarters. Can you quantify what we can expect if we can expect other releases of working capital in coming quarters? That's the first question. The second question about cash generation. We have seen more challenging conditions in the iron ore market, a price below $100, [ sea ] times freight around $35 coming from China. If you're hoping to have an improvement in operational cash in coming quarters, well, the cash generation of the main asset of the group, Siemens will be more pressured because of the price of iron ore and freight. Are you assessing other alternatives to monetize your assets besides what has been contemplated in the original plan, the sale of the control of cement and a minority sale in infrastructure. These are my two questions.

Matheus, thank you for the questions. Thank you for your attendance at the call. Regarding cash generation, the release of cash that we had through an improvement in working capital and reduction of costs took place most in steel. It also happened in mining in steel, the steel plants were in Brazil as well as outside. 75% of stock was in [indiscernible] [ Ba Ronda ] Brazil. This was the main driver for inventory reduction and the release of cash flow. Martinez mentioned this, we have the forecast of releasing more cash through a reduction of inventory throughout the coming quarters. Several companies have inventory levels above what would be adequate for the operations. We're bringing them down to a more efficient level. And we can get to an additional BRL 1 billion of cash release until the end of the year if we comply with our goals. I'm not speaking only of inventory of finished products. We have reductions projected in raw material, intermediate material and maintenance as well. We have a very well-defined plan company by company with goals that we follow up on every week. Now regarding that discussion of mining, yes, we had an impact in the second quarter. There will be an improvement in the third quarter, not only in volume, we will no longer have the scheduled shutdowns for Casa de Pedra and others. We also have dry weather. We have a recovery of the exchange rate compared to previous weeks and rate well undergoes constant management from our team. We're trying to reduce the pressure brought about by the war in the Middle East. We see a better third quarter for mining in terms of results and cash flow. Regarding further sales of assets, CSN, well, there are several very important points in the company. But among some of them is the quality and diversity of assets the company has. Some are noncore, a volume of real estate assets outside of Brazil that are very profitable. They're not core assets. If the Board makes the decision, they can sell off more assets to speed up the deleveraging. We're very focused on the processes that are underway at present, cement and infrastructure. Now on our agenda, we always have alternative plans. If the company decides to sell more assets, the market will be duly informed. What is important is the company commitment and the Chairman mentioned this with the deleveraging of the group. Well, the interest rate is at a nonfeasible level for a large group with high leverage with a large number of assets in its portfolio, and we have to release capital to make investments for assets that are important in terms of cash generation for the group to transform CSN in the coming years. So our commitment with deleveraging is total and permanent.

Our next question comes from Gabriel Barra from Citi.