Gerdau has agreed to buy rival Chaparral Steel of the US for $4.2bn, one of the biggest overseas acquisitions by a Brazilian company and a further sign of the South American steelmaker’s ambition to play a leading role in the global consolidation of the sector.

“This makes perfect sense from a strategic point of view, even if the price was higher than usual,” said Pedro Galdi, steel industry analyst at ABN Amro in São Paulo.