Gerdau SA, Latin America’s biggest steelmaker, said it will begin maintenance work at steel mills in Brazil and Peru earlier than expected, cutting output and relying on stockpiles to supply customers.

The company’s Siderperu unit stopped operations yesterday and will gradually resume output starting in January, with a blast furnace staying offline until March, Gerdau said today in a statement. A blast furnace at the Acominas unit in Brazil will be halted from Dec. 15 to March 15, reducing pig-iron output by 720,000 metric tons, or 16 percent of capacity, Gerdau said.

Porto Alegre, Brazil-based Gerdau and rivals are trimming output as the global credit crunch pushes countries from the U.S. to Japan into recession, eroding demand for industrial materials. Gerdau’s steel deliveries will fall this quarter, Chief Executive Officer Andre Gerdau Johannpeter said.

“Based on what we saw in October and November, we expect a drop of 24 percent” in steel deliveries in the fourth quarter, Johannpeter said today during a meeting with analysts in Sao Paulo. “We have already been cutting production at our U.S. units, shutting some plants for weekend maintenance or eliminating shifts.”

Gerdau may seek to move up more maintenance work at U.S. plants before it resorts to firing workers because of weaker demand, Chief Financial Officer Osvaldo Schirmer said today, without providing details.

“Brazil has been less affected than other markets because of the strength of Brazilian banks,” Johannpeter said.

“Auto- sector demand for steel fell first in the U.S., before other markets.”

Gerdau rose 60 centavos, or 4.9 percent, to 12.89 reais in Sao Paulo trading. The stock has lost 49 percent this year, compared with a 45 percent drop for Brazil’s benchmark Bovespa index.

Source: Bloomberg