Gerdau : COMMENCEMENT OF CASH TENDER OFFER FOR CERTAIN OF THE OUTSTANDING 7.000% BONDS DUE 2020, 5.750% BONDS DUE 2021 AND 5.893% BONDS DUE 2024, UP TO A MAXIMUM AMOUNT OF U.S$500,000,000

GERDAU S.A.

CNPJ/MF n.º 33.611.500/0001-19 NIRE: 33300032266

NOTICE TO THE MARKET COMMENCEMENT OF CASH TENDER OFFER FOR CERTAIN OF THE OUTSTANDING 7.000% BONDS DUE 2020, 5.750% BONDS DUE 2021 AND 5.893% BONDS DUE 2024, UP TO A MAXIMUM AMOUNT OF U.S$500,000,000

GERDAU S.A. (B3: GGBR, NYSE: GGB, Latibex: XGGB), on this date, announces the commencement of an offer to purchase for cash (the "Tender Offer"), up to a maximum amount of U.S.$500,000,000 (including accrued and unpaid interest) of the following outstanding (i) 7.000% Bonds due 2020 ("2020 Bonds") issued by Gerdau Holdings Inc.; (ii) 5.750% Bonds due 2021 ("2021 Bonds") issued by Gerdau Trade Inc.; and (iii) 5.893% Bonds due 2024 issued jointly by Gerdau Holdings Inc. and GTL Trade Finance Inc. ("2024 Bonds", and together with the 2020 Bonds and the 2021 Bonds, the "Bonds"). The Tender Offer is being made pursuant to the offer to purchase dated October 4, 2017. The principal purpose of the Tender Offer is for the management of the Company liabilities.

The table below summarizes certain payment terms for the Tender Offer:

Description of Bonds	CUSIP / ISIN Nos.	Outstanding Principal Amount	Tender Offer Consideration (1)(2)	Early Tender Payment (1)	Total Consideration (1)(2)	Tender Cap	Acceptance Priority Level
5.750% Bonds due 2021	G3925DAA8 / USG3925DAA84 37373WAA8 / US37373WAA80	U.S.$1,250,000,000	U.S.$1,060.00	U.S.$30.00	U.S.$1,090.00	N/A	1
7.000% Bonds due 2020	U37405AA2 / USU37405AA20 37373UAA2 / US37373UAA25	U.S.$638,603,000	U.S.$1,066.25	U.S.$30.00	U.S.$1,096.25	N/A	2
5.893% Bonds due 2024	G24422AA8 / USG24422AA83 36249SAA1 / US36249SAA15	U.S.$1,165,629,000	U.S.$1,046.25	U.S.$30.00	U.S.$1,076.25	U.S.$75,000,000	3

1. Per U.S. $1,000 principal amount of Bonds.

2. Excludes accrued interest, which will be paid in addition to the Tender Offer Consideration or the Total Consideration, as applicable.

It is intended the validly tendered Bonds in the context of the Tender Offer will be exchanged by the Citigroup Global Markets Inc. and Santander Investment Securities Inc. (collectively, the Offerors, on behalf of Company) with Gerdau Trade Inc. for a decrease in the proceeds of certain new bonds to be issued in a new offering proposed to be launched by Gerdau Trade Inc (the "New Offering").

This notice shall not constitute an offer for sale, purchase or exchange or solicitation of an offer to sell, purchase or exchange the securities described herein, nor should any offer, purchase or exchange of such securities be made in any state or jurisdiction in which such offer is considered unlawful prior to registration or qualification under applicable laws for securities of such state or jurisdiction.

This notice to the market does not represent an offer to sell securities or a solicitation to buy securities in the United States or in any other country. The New Offering was not and will not be registered under the U.S. Securities Act of 1933 ("Securities Act"), as amended. Consequently, the bonds issued in the New Offering are prohibited from being offered or sold in the United States or to U.S. citizens without the applicable registration or exemption from registration required under the Securities Act or applicable laws of other jurisdictions.

This notice to the market is released for disclosure purposes only, in accordance with applicable legislation. It not does not constitute marketing material, and should not be interpreted as advertising an offer to sell or soliciting any offer to buy securities issued by any of the Issuers. This notice to the market is not for distribution in or into or to any person located or resident in the United States, its territories and possessions, any state of the United States or the District of Columbia or in any jurisdiction where it is unlawful to release, publish or distribute this announcement, other than any exemption thereunder.

Forward-Looking Statements

This notice includes and references "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may relate to, among other things, the Issuers' business strategy, goals and expectations concerning its market position, future operations, margins and profitability.

Although the Company believes the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect.

The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors.

The Company undertakes no obligation to update any of their forward-looking statements.

The Tender Offer have not been, and will not be, registered with the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários or the CVM). The Tender Offer will not be made in Brazil, except in circumstances that do not constitute a public offering or unauthorized distribution under Brazilian laws and regulations.

Rio de Janeiro, October 4, 2017.

Harley Lorentz Scardoelli

Executive Officer Investor Relations Officer