Good afternoon ladies and gentlemen and thank you for holding. At this time, we would like to welcome everyone to CSN's conference call to present results for the first quarter 2020.Today, we have with us the company's executive officers. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company presentation. And following this, there will be a question-and-answer session at which time further instructions will be given. [Operator Instructions].We have a simultaneous webcast that may be accessed through CSN's Investor Relation website at csn.com.br/ri, where the presentation is also available. The replay of this event will be available soon after the closing for one week period. Once again, you can watch the presentation at your own convenience.Before proceeding, we would like to state that forward-looking statements herein are near expectations or trends that are based on the current assumptions and opinions of the company's management. The future results, performance and events may differ materially from those expressed herein. They 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 general and economic conditions in Brazil and other countries, interest rates and exchange rate levels, future rescheduling or prepayment of debt denominated in foreign currencies, protectionist measures in the U.S., Brazil and other countries, changing laws and regulations and general competitive factors globally, regionally or nationally.We would now like to turn the conference over to Mr. Marcelo Cunha Ribeiro, the IRO, who will present the company's operating and financial highlights for the period. You have the floor, Mr. Ribeiro.

Good afternoon to all of you and thank you for participating in our results conference call for the first quarter of 2020. We are going to have a brief presentation followed by the comments by Chairman and CEO, Benjamin Steinbruch. We begin with an update for the market on the efforts that the company has adapted in the efforts against COVID-19. Of course, this is inevitable as it affects all of us. As part of its activities, CSN has businesses that are deemed to be essential such as mining and steel production. And because of this, we have maintained our activities without interruption.Our operation lines are operating at full speed but with a certain care where the priorities are the health of our employees and that is why we have put in place the best practices such as distancing, awareness and the use of individual protection equipments, sanitizers, the use of masks. Once again, distancing at the workstation, changes in shifts and transportation and all of these measures have been quite successful in containing the advance of infection in our workplace. Up to present, we have very few cases to report and luckily enough, none of these patients is serious. And most of the employees have already recovered.Now, besides this internal focus on our employees' health, the company has carried out activities to support the community where we operate, especially in Rio de Janeiro, Volta Redonda. One of the most important is the donation of 500,000 fabric masks to the health secretary of that municipality, the donation of 50,000 food baskets for the community for needy people that have been impacted by the pandemic and our employees themselves and finally, an important measure, the city hall of Volta Redonda saw contributions for their Campaign Hospital for medium complexity patients.We then…

Good afternoon to all of you and thank you very much for your participation in our conference call. I would like to make some remarks very briefly and say that we are fully respecting the pandemic that has arisen in Brazil and the entire world. We acknowledge the difficulties in economy and politics. Notwithstanding this, we do have to go through this and in the best way possible. I believe that CSN has been working arduously, at least in-house, to do whatever we can to reduce costs, making investments in productivity enhancements and productivity and we are following up very closely on the markets.Now to speak about each segment. My market perception is that from the viewpoint of cement, we are going through a very good moment. The market is stable practically and we believe that we will have an increase of sales for the second quarter. We are working with production at 80% in the first quarter. We are going to obtain 90% for the second quarter.Now, prices are being corrected favorably. And in truth, what has made the great difference is the availability of logistics. We have been more aggressive in the market and that is why we had a good performance in the first quarter and expect this to increase in the second quarter.In terms of long steel, because of our limited representativeness in the market, we are selling full. We haven't had any problem in placing our products and we also had a price improvement. We believe that for the second quarter, they should be maintained or improved vis-à-vis the first quarter.In terms of mining, we have an opposite problem which means that all of the conditions are favorable when you think of price, the dollar rate, freight. We had one problems with rainfall in the…

[Operator Instructions]. Our first question comes from Daniel Sasson from Itau BBA.

A good afternoon to all of you and thank you for taking my question. My first question refers to the potential stoppage of blast furnace two. Is there any period in which you plan to come back? And if you are going to stop, will this be similar to the scheduled stoppages that you had before? How quickly will the blast furnace comes back into operation? And what is the savings potential that you refer to in terms of variable costs and margin improvement? My second question, perhaps to Marcelo, refers to that target of BRL23 billion in net debt and three times net debt EBITDA ratio at the end of 2021. Now how much of this depends on cash generation and other investment programs? I imagine that in the last few months, the situation has been ever more complex. Could you speak about the potential sale of some assets? Thank you very much.

Well, regarding you first question, the stoppage of blast furnace two, from the technical viewpoint, we have already carried out this comparison very rationally because of the cost reduction. You can calculate that the reduction of cost will be 10% between blast furnace three and blast furnace two. We always operate with this costs difference. And of course, the trend is that this spread will increase ever more. Then you can consider 10% difference for the steel produced in blast furnace three and the one produced in blast furnace two.Now when it comes to production, I think it makes sense to do the stoppage. Why? It will allow us to sell more iron ore. We are going to use less pellets. We will have a better pet coke. And additionally, if we consider the inventory levels that we, without a doubt, we will consider that we can place in the market this entire inventory that we have.From the rational viewpoint therefore if we take into account results, this is what would happen. From the strategic viewpoint, this is where we have a doubt. And we are working with different possibilities of allocating a large part of our production from blast furnace two for export. Now, if we are successful in this attempt, it would make sense to continue to work with all of our equipment lines servicing both the domestic and foreign market, awaiting a recovery for the second quarter and the end of the year and to come into 2020 in a good position. Now what is holding us back in terms of our decision is social issue.To make sure that at this point in time, we do not contribute with a crisis or by exacerbating the social situation, especially in the municipalities where we are active. This is a technical strategic decision, if we want to think about it that way. And in the coming, we are going to enter into discussions and in one or two weeks at the most we will be able to make this decision. The technical part has been scheduled fully and if we truly do work with a stoppage, we are going to do it with a great deal of calmness and with a great deal of technical security as we have all the stoppage in blast furnace two twice. This would be the third time we will do it without risk and in a very natural fashion. Now between this week and the next, we will come to a decisionYour second question, Daniel.

Before I respond to it, I don't know if the answer given by Benjamin fully responds to your question. Regarding the second question, we have made an adjustment of our balance from BRL20 billion to BRL23 billion because of the exchange rate. But we maintain that figure of three times net debt EBITDA. And informally, we always have a target of $1 billion for divestment potential. Last year, $1 billion was BRL4 billion. We are now getting close to BRL6 billion. This is also helpful. So we are considering having a reduction of BRL10 billion between now and 2021. The difference will be the cash generated by the operation.

And in terms of SWT, do you have anything to tell us?

Nothing different from what we said two months ago. In those two months, Europe was in a situation of total abnormality. But there is a positive side to this. The negotiations have continued and the potential buyers, albeit involved with their own problems because of the pandemic, are still engaged and interested. The possibility continues to exist.

Thank you Marcelo.

Our next question comes from Thiago from Goldman Sachs. You may proceed.

Good afternoon. Thank you for taking my question. My first question refers to mining. That had a much lower volume this quarter. You mentioned the impact of rainfall and the lack of your environmental licenses. If you could break this down and tell us what was caused by rainfall and what was caused by the licenses? And you had a cost of several million because of this idle capacity. Now why did you take this decision? Shouldn't we have business as usual? Now the second question, perhaps to Marcelo, on a more positive note. If you could give us more color of what is happening with your debt, BRL200 million less? Thank you very much.

Thank you. Now, regarding that ratio, it is always very imprecise. So the mining was to come into operation in March and the impact was more in March and April. 80% of the impact in the first quarter was due to the rainfall. And as of May, we will see that this will return to normalcy.When it comes to idle capacity, you have to comply with accounting rules. You can not allocate to sold products costs that were not applied to production. And if they are operational sots, they are classified n other expenses. And this is what happened last year in 2019 with the reform of blast furnace three, where some equipment was not used and the cost associated to that equipment was not in the cost of goods sold but in another line item with the criteria that CSN always uses.Now for the first time, we have this steep drop in volume. And this is a one-off event. The shipment, transportation and equipment at the mine were not used. And what happened was that same practice separating those cost for products that have not been sold.Were there any more questions?

Your debt service? This was benefited by the positive exchange rate in cash. This financial expense therefore has that net characteristic. In this quarter, we had an impact and an appreciation in reais. Thank you.

The next question is from Gabriel Galvao from Credit Suisse.

Good afternoon and thank you, Benjamin, Marcelo for taking my question and congratulations on the rollover of your debt. My question refers to your commercial strategy. When there is a resumption of demand, what are going to do initially? Increase prices or increase your market share? What has the best in the industry done regarding this? The second question along the same line. If you could speak about your export mix? You sold more to the international market in this first quarter. What is your strategy going forward during this year? Of course, it will depend on the second quarter. So if you could speak more about this, I would appreciate it?

Hello Gabriel. This is Martinez. The strategy has changed somewhat compared to the end of last year, but basically it is the same. Benjamin has mentioned that we are going to work with the blast furnace three that is producing the full steam. This is the lower cost equipment and the more economical production will be in blast furnace three using the minimum amount of outside pet coke and pellets. Another point that does not change that I always mention and I always repeat this, we have maintained this during the year. 50% to 53% of our output is linked to the coded products.The third point, which I have reiterated often and it has become very clear in our strategy. Thanks to our strategy, at present we don't depend exclusively on the automobile market. CSN has 12% of the automotive market and markets that have had less peak troughs such as civil construction, there we have 16% in the industry and general 16%, in packaging 11%. There wasn't a drop. Quite the contrary. 9% in health appliances and 15% in distribution.Our strategy of not having all the eggs in the same basket continues. And in export, besides other strategies that we are seeking linked to maintaining the production of the blast furnace two, we are competing this amount in the United States for selling fully to the USA. We are selling 300,000 and we are going to produce a large amount of galvanized products that have been contracted until the end of the year. Presently, we have been able to close some deals in Canada, Mexico and something in Latin America.Of course, this would be nirvana, but the fact is that these markets are also suffering but we have become one competitive because of the exchange rate. Now the recovery…

No, that was very clear, Martinez. Thank you for your answer.

Thank you Gabriel.

Our next question is coming from Mr. Carlos de Alba with Morgan Stanley. You may proceed.

Thank you very much everyone. Good afternoon. I hope everyone is doing fine. I just wanted to check, how much do you expect reducing in terms of benefit because of the lower freight cost? I wonder if you can quantify this and particularly you are able to monetize from lower sales? And then maybe I missed this, but can you comment on the latest regarding asset sales to further strengthen the balance sheet and generate cash flow? That would be great. And my last question. Do you expect to increase production of iron ore in any quarter? Can you mention the new guidance for the year in terms of iron ore or steel? That would be great. Thank you very much.

Carlos, thank you for your question. Well, freight, we are working below $7 and $8 and we began the year with an expectation of about $10 higher. And this curve will remain this way this year. But with simple math, $10 times the total of our export as we are thinking of selling 36 million and exporting 32 million, we are speaking of $320 million of advantage that would come from this, almost BRL2 billion. And of course, this is significant. This is not guaranteed but it would be impactful for our profitability.When it comes to the sale of assets, I updated you in terms of SWT. This is an asset that has been debated for over a year. Now, the magnitude is of $500 million in terms of debt reduction. Now, adjusted by the present exchange, it means this amount would be even greater. It could be half of our needs. But we also have several other options such as streaming. That continues to be a possibility or an even greater alternative opportunity which would be complementary or replace this IPO of CSN Mining, not in the present day market. But the company is making some moves and will be ready to do this once we have an opening of the economy, as mentioned by Benjamin. I think these were your questions. Are there any further doubts, Carlos?

[Operator Instructions]. Thank you. As we have no further questions, we will return the floor to Mr. Marcelo Cunha Ribeiro, the IR Officer, for his closing remarks.

It seems that we have more questions. No, apparently we have no more questions. I would like to thank all of you for your presence and we are at your entire disposal. Have a good afternoon.

Thank you. The earnings release conference call for CSN ends here. Have a good afternoon.