Good afternoon, ladies and gentlemen. Thank you for holding. At this time, we would like to welcome you to CSN's Conference Call to present Results for the Third Quarter '20. Today, we have with us the Company's executive officers. We would like to inform you that this event is being recorded and participants will be in a listen-only mode during the Company presentation. And following this, we will go onto the Q&A section when further instructions will be given. [Operator Instructions] We have simultaneous webcast that may be accessed through CSN's Investor Relations website where the presentation is also available. The replay of this event will be available for the period of one week. Once again, you can slip through the slide at your own convenience. Before proceeding, we would like to state that some forward-looking statements made herein are near expectations or trends based on the current assumptions and opinions of the Company management. Future results, performance and events may differ materially from those expressed within as they do not constitute protections. In fact, actual results, performance of the event may differ materially from those expressed or implied by forward-looking statements due to several factors; general and economic conditions in Brazil and other countries, interest rates and exchange rate levels or prepayment of debt denominated in foreign currencies. Protection is measures in the U.S., Brazil and other countries, changes in loud and regulations and general competitive factors at global, regional or national basis. We would now like to turn the conference over to Mr. Marcelo Cunha Ribeiro, Investor Relations Executive Officer, who will present the Company's operating and financial highlights for the period. You may proceed, Mr. Riberio.

A good day to all of you, once again thank you for participating in our conference call for CSN. We're going to, first of all, go through the presentation, and upon the close of the presentation, we will hear from the Chairman and then go on to the Q&A session. We begin the presentation on Page 2 to speak about our results, and it is important to celebrate we were able to go through a quarter that is still being impacted by the pandemic but with very little impact on our operations as you can see from the results and from the viewpoint of the health of our employees. We have a favorable situation. We have had only six active cases at the plant at Volta Redonda. And of course, this points the assertiveness of our precautionary measures that are still valid. And we intend, of course, to continue to obtain these excellent results. On Page number 2, to speak about the highlights. We begin with our excellent results, we prepared for the worst, but we had something better. We had an accelerated growth in all of the markets, but we face the market much better with boldness in terms of cost and expense working in all of the item lines of our balance, and we were able to achieve the best adjusted EBITDA of BRL3.5 billion in our history. This gave way to a strong cash generation, a lengthening of liabilities, new prepayment, reinforcing liquidity and an improved debt profile. And what is very important, once again, although our indebtedness is high, this quarter, we have reduced our debt to BRL2.5 billion with the best reduction in leverage in the last five years with a drop of 1.5 and we will refer to this during the presentation. On Page…

A good day to all of you, and thank you for participating in the call, I would like to highlight a few elements that have already been mentioned previously, but we would like to underscore once again always underscore, the team has obtained this favorable result and a favorable outlook going forward. We have the reduction of costs. We began the year with a very strong program to reduce expenses encompassing all of our businesses and all the possibilities that existed to in practice, cut down our cost and become ever more competitive or year that seems to be very challenging. We prepare the Company as a whole for a varying that poor market improves we prepared CSN for a war. And what we wanted to do was to obtain the greatest competitiveness and resistance and resilience to go through a year that we imagine would be very difficult our forecast and that of everybody, of course, beginning in the second quarter, things began to improve. And especially beginning in the third quarter things did not comply with our expectation of a market that we had deemed to be lacking began to depend on the projection of all of our products. Now this work, as I mentioned, was carried out in all of the business segments of the Company, all of the areas of the Company, we're still lagging behind in terms of the steel and cement results. In the steel business, we're making investments in the coke and centric area. And with the return of blast furnace two, we once again will begin working full steam in the second fortnight of November. And we will be able to have a greater decrease in fixed costs. And since men have some timely problems in production, leading to a cost increase,…

[Operator Instructions] Our first question comes from Thiago Augusto from Goldman Sachs. You may proceed.

My first question refers to the situation of domestic shipments in Brazil for the steel company. It seems that the market is extremely active. Some clients are referring to a lack of product, if you could speak about this issue of supply. And if there is the potential for a new price increase in the coming weeks, which is the parity level that you would consider and if you're concerned with the exchange rate, if this new increase would be at risk or not because of this?

Now the first question that you made about supply and demand. In terms of supply, simply could give you an idea Ninas and Arcelor are working with all of their blast furnaces, we will resume in the second fortnight of November. In April, we sold 500,000 tons per month, went to 600, 800, and August and September, 900 to 1 million tons. I think this show the advance we have in the domestic market in terms of supply. When it comes to demand, if we put together all the capacity of and include CNS, the capacity is 1.2 million tons. There is no possibility at all, but there will -- not be no steel in the market. We're working with all of our lines. Another very important aspect that has helped us in our day today in the domestic market are the imports. We have a drop of imports of 60% to 70%, 80,000 tons per month, and I have to be careful because I'm a leader. And both 80,000, 50,000 have been put in place. So that idea of having a lot of supply has to be totally discarded. An important data that sustains the Brazilian market in the China side, that in China, they're working with 90% degree of use. And China itself is importing from Brazil and Russia. So this is a very important equation. As it comes to the parity that all the count that we always work with, the Chinese BQ will drop, it will be around $500. I could put $510 or $520, but the prime is negative in 5% to 6%. So this does allow us to go on to a new price increase, and we have already announced this for November, 10% in November and 7% of the galvanized product. You spoke…

If you could referred to the increase you spoke about a product increase of 10% for flat and long steel. You have mentioned 13% and have you begun a negotiation with the automotive market for price increases?

Something important in terms of prices, Thiago, simply to clarify, what we are doing to give you an idea in distribution to eliminate confusion, until August, we had a 40% increase in distribution, large networks and minor segments of industry. We had a new increase in October, that went from 11.75% to 13.5% and this is also for distribution and some industrial change. In November, 7.5% and 10%, so this total 40% and we should have a price carry over 12% to 13% in the fourth quarter. And in the fourth quarter, this will be the average price increase for CSN. Automotive, we have initiated negotiations. As you know, this is not the main sector for CSN. We have a small share compared to our peers. But if we observe increases than another production change, we can't imagine less than 30% or 35% -- less than 30% or 35% increases for the automotive cane to produce 1 ton of steel, I need 1.6% of iron ore and 4.6% of coal. If you consider to the dollar rate in January of this year in iron ore and coal at present, if we do our calculations, the cost increase that we had was about 55%. So therefore, it's to longer about supply and demand, it's simply about a reduction of costs for the automotive market.

The next question comes from Thiago from Bradesco BBI. You may proceed.

Martinez, if you could further explore that vision that you have for 2021, if you look at the risks that you can see for the very strong demand that has surprised everybody. What is the main risk that you foresee for 2021? If we have any problems in demand or if you can continue to be enthusiastic as you're present in the short term? And if this enthusiasm can extend throughout 2021, and if you could comment on the cement market I think construction is very strong in the retail segment. Therefore -- and you have a direct exposure to the construction market in the retail segment. I would like to confirm what we think of this in the first and second quarters of 2021, if this could perhaps smooth out the situation?

Well, when it comes to the market, we're extremely optimistic and when I speak about optimism, it's because of the orders. I have an order list that extends until February. The pillars that we're speaking about client demand are positive. And even though there's a small drop in December January, we need to have at least one more month, which our inventory and we have already spoken about this. All of the value chain without exception not to replace intermediate and finished inventory. If we imagine the worst scenario, in the first quarter, we're not going to work with a good market and with replenishment, but with a good supply. When it comes to imports, well, we don't want the imports to come back to Brazil at the speed that we observed in the past. We're being more selective and the increases now where there is a higher risk in modular base to cut imports. And the coming year, the growth should be 10%. The close of the market will be close to 12 million tons and the next year, we imagine 13 million of a flat market. And the long steel market was sold out. I'm selecting who to sell to. We're adding value. We're selling more than normal. And this is the motivation that we have for next year. The only factor that has still not away on to the growth is the automotive sector. And there is a possibility of the growth in the truck segment, which will require a great deal of scale. Now when it comes to demand, to give you an idea, the market capacity is 100 million tons, the theoretical capacity. At present, the capacity that is available to the market is of 75. And if we analyze the third quarter of 2020, we have gotten to BRL70 million. So in cement, we're balancing supply and demand. What happened in cement? We have a competitive cost, and we truly -- we covered our prices, and we have a record EBITDA BRL100 million only in the third quarter. And the trend for cement is highly positive. Construction continues on, and commercial and residential construction will continue Slide 14 no problem for the first quarter in the cement sector. I don't know, if I forgot anything.

No. I don't think you forgot anything. Simply another question, if you allow us a confirmation you have already announced an increase in long steel for November?

Yes absolutely. Long has to accompany the construction sector as well. And it is not possible to import long steel. The parity is very close to zero and we need to explore the ability to have more fragmented product to work along with cement in this segment as a whole.

The next question comes from Daniel Sasson from Itau BBA.

Congratulations for your results. My first question is Martinez. If you could help us to reconcile the increases that you announced during the first quarter with that average price increase that we had in the domestic market of 3%, and the coded products and what happened with the automotive sector? We would like to gain a better understanding why these prices did not increase more in this quarter, Martinez? And you said that you would have a carryover of 12% to 13% in the third quarter. My second question, I don't know if Edvaldo is there about cement. We also saw a significant increase in prices for cement, and we follow-up on cement, and it seems to us that the price in the Brazilian market is quite below that of the international price that we in dollars in other markets in Latin America, $110 or $120 per ton. If you could comment there for which is the impact of this combined effect with the figures improving, perhaps fatal construction will have higher prices. And you have a more normalized EBITDA. So what is your view of this scenario in terms of the results of this operation?

Okay, Daniel. Something important is that the net revenues of CSN increased 33%, and the equation is price and volume, another important thing in doubling the EBITDA. Now regarding the price, this is an account. What happen in the third quarter? We increased a 165% market and the white line. There was no price increase by the industry. So, this represented less than the market in the second quarter. We had a worsening in the mix. And in the second quarter, the increase was 7%, although the market has been stable. This is the reason of the difference in the third quarter. In the fourth quarter, we will speak about the increases, and this should be about 12% to 13% increases. Increase in industry will lead to carryovers in civil construction and distribution. Now to up to September, our increases were 40% in hot drawn steel. Now we have a new increase in distribution that was done in October, 3% in the hot rolled, 11.5% and a new increase announced in November that will be applied in November and December of 7% is galvanized and 10% in hot rolled. So we're catching up with the increases made in distribution, and we're waiting to correct the prices for assembly lines and others in January. When it comes to cement, our cost has decreased, but we have recovered in terms of prices. We're not a sector leader in the Southeast, we have 15% to 20% for São Paulo Real and Minas and 6% share in the rest of Brazil. So we're heading towards optimizes to service 20,000 clients we have in our portfolio. And when it comes to price, you're right, in the market of Colombia, Ecuador and Dominican Republic, the price is 110, in Europe 95, Canada 96. And when you come to Brazil, we're speaking of BRL260 -- BRL270 per ton. According to the present exchange rate, the price is below international prices. Now cement is a basic raw material, and we have to be coherent between supply and demand and the customers' capacity to buy. Basically, this is it.

So as confirmation nowadays even with a richer mix and with higher added-value products that you sell to the automotive market, the average price to that auto modern market is lower than the one you are practicing with distribution?

Yes. That's it. Now what exists is a contract with assembly lines to last for a year. And luckily enough, we don't have that many contracts. The price has remained fixed. And this is not only with the automotive market. This also exists in the white line where the prices have to respect a certain periodicity, whether it is quarterly or every six months. So imagine the avalanche we will have in the fourth quarter and beginning of 2021. We're going to consolidate the prices given to civil construction and distribution and a simultaneous recovery of all of the industrial chain. And I'm going to give you a model for you to calculate this easier.

The next question comes from Caio Ribeiro from Credit Suisse.

And my question is to Martinez. You have had four increases this year beginning in July. And once again, the automotive chain is working with prices well below those of others. Now how can you generate a stronger restocking movement among assembly plants? And it seems that the stock is lower than usual, as you mentioned. Now perhaps if you work with the hedge in the iron ore prices and finally, in terms of cement, wouldn't this be a good time once again to practice some price increases?

We truly cannot work with a net inventory for assembly plants. We're servicing the entire sector and trying to supply them justly. We try to supply all the production chains. We have put all of our eggs in the same basket. We supply distribution, white line and all of the sectors. Now another important point for CSN, in the third quarter, we sent 150,000 tons of galvanized material to the USA. We're going to continue with that strategy of complying with the code in the U.S. market of 300,000 tons. There is no opportunity of creating a stock for CSN at present. And the best in is to service all of the other production change. And with the hedging, we work with tonnage that only represents 5% of our company. This is not the rate for the Company. But it's important when it comes to protecting our cash flow and guaranteeing a strong cash flow. But we're not going to work on this. In a relevant way, this was done in September, October and November. In the past, we were no longer doing this. When it comes to the offer of shares, we're in a quiet period, and I truly cannot comment on this, unfortunately.

Our next question is coming from Mr. Carlos de Alba. Mr. Carlos, you may proceed.

A lot of the questions have been answered, but maybe what can you talk about the aspects of your forecast for cost particularly on steel and maybe cement in the coming quarters. Clearly, pricing has been something like going on or has been going on well for you. And volumes in that you continue to be quite constructive, at least something in the first quarter of next year, but what about cost and what the implications are for margin expansions? Thank you.

As mentioned by Benjamin, we have focused strongly on all of our business units and we're now harvesting the results. And these are not timely results we will have good news to show you in the upcoming quarters. In steel, this refers to the renovation of the blast furnace as well as other activities. So, we're going to continue to see an increase in the cost levels. And once we -- well, because of blast furnace two, we have a marginal cost that is somewhat higher, but we have diluted our fixed costs, and we continue to be very efficient in terms of mining in the first semester, we had an atypical situation with low volume. We have now increased the volumes and would be appreciated exchange rate. The cost will be $14 or $15 quite efficient. And in terms of cement, we have Edvaldo responsible for the unit.

Carlos, this is Edvaldo. Basically in cement, what is happening is the following. We have significant exchange rate pressure about 40% of our costs are foresee that is imported from the USA, but we have been able to mitigate these effects and the cost of in the cost of fuel through changes and enhancements we're making in the process and with a relatively low CapEx and simple projects, that are enabling us to have a better fuel mix that is more efficient and has a lower cost to the operation. So we think we will continue to operate with a cement cost stable costs that we have maintained so far. Are there any further questions Calros or…

Yes, the follow-up question is on working capital or cash flow generation in the fourth quarter, maybe for Marcelo. How do you see without playing out Marcelo as you close the year in terms of working capital and the impact on cash generation?

Marcelo, are you there? Once again, I'm back in the call. I have been able to connect again. Ladies and gentlemen, due to technical reasons, we had a very short pause in our conference call. We now have a question from JP Morgan. You may proceed sir.

I think we have thoroughly discussed the quarter. I would like to ask a question to Benjamin, the Chairman. In the introduction, you spoke about your focus, which is to continue to generate cash for the Company and to prepare the Company to participate in new opportunities for the future. Let's speak about this future and which are the opportunities that you would like to have. And what do you imagine for CSN in the future?

Well, in truth, we have been speaking about this for quite some time. We foresee a possibility for organic growth in both sectors in which we are already working. With a view not only to increase quantity, but mainly the quality and diversity, we have accrued during all of this time, only very good assets. And we have already faced very challenging growth programs beginning with mining, and we have a material effect, where we presented a new guidance for mining. And with significant and very aggressive growth of 3.5x our capacity using our own resources so this is an in-house growth as part of what we already have as well as in cement. As you know, we have two plants that we acquired. One in Europe and one here, and we are forcing the opportunity of solidation because of the very difficult times that cement went through and discontinues vis-à-vis the international scenario. So we believe there will be a significant change in terms of consolidation as the idleness that we see is not real in truth there is a great deal of nominal capacity that is not feasible in terms of cost. If we analyze this, we believe that that does exist that possibility for organic growth among the assets that we have and eventually the opportunity for mergers and others. Now in the steel sector, our work is to ensure that we have ever more quality and greater diversification in the marketing of products and in clients and investments for productivity gains. And still, we have an enormous potential that we can still explore. And basically, this is what we are working on when it comes to the Company's growth in the coming years. Now along with this leverage program and we have to bring these two together in mining, for example, we have self-sustainable investment. They can -- they become feasible per se. And although we have very attractive funding lines, especially from the Asian market, so we are considering in taking them or we're going to make investments in mining as well as in cement to make the most of that capacity of self generation and the funding and we will maintain the Company deleverage. Now perhaps the only thing that is the novelty and that we're beginning to explore and move in are there alternatives that will arise in terms of natural gas. First of all, this is a very important raw material for us. We are large consumers of natural gas and gas per se. And beyond this, through the increase in the supply of gas we believe that there will be a change in the Brazilian energy model. And we can use this product for other purposes. And as far as we are concerned, we're thinking about the change in legislation, thinking about the alternatives and we're going to also serve investment alternatives in this area. Basically, this is what we are planning.

Thank you. As we have no further questions, we would like to return the floor to Marcelo Ribeiro for the closing remarks.

Very well, we would like to celebrate of course the excellent results during these very difficult and unexpected moments, and we continue to have very positive expectations for the upcoming quarters. I would like to end by thanking all of you for your participation. See you again soon. Thank you.

The results conference call for CSN ends here. Thank you for participating and have a good afternoon.