Steel consumption in Latin America reflects economic recovery in the region at the end of the year
Latin America continues to show signs of economic recovery, although performance is uneven across countries in the region. The goal of the steel industry is to continue to meet the demand in each country. In this scenario, the total production of crude steel in 2020 was 55.6 million tons (Mt), which represents a decrease of 8.4% compared to the total in 2019. This is similar to the world results, which registered, without taking into account China, a reduction of 7.7%, to 822 Mt. The Chinese steel industry, in turn, recorded a production of 1.053 billion tons, equivalent to an increase of 5.2%.
In Latin America, Chile was the country with the best performance, with 1.2 Mt and an increase of 2.1%; at the other extreme was Peru, with a reduction of 40.6%, to 732 thousand tons.
Total rolled steel production fell 9.7%, reaching 46.3 Mt, similar to 2003 production and far from the best performance, in 2013, of 57.5 Mt. The largest drop in production of rolled products for the main economies in percentage was recorded in Argentina, with -18.8% (total of 3.5 Mt in 2020), and in volume in Mexico with a drop of -1.7 Mt (-9.9% and volume of 15.8 Mt). As a reference, Brazil closed with -3.7% (21.7 Mt).
Steel consumption reflects the improvement in the regional economy, having registered in November 2020 an increase to 5.5 Mt, 6% more compared to the same month last year – there was not a month with numbers like this since October 2019.
It is estimated that this performance may be maintained during the first quarter of 2021. In November 2020, the share of imports in consumption fell and the expectation is that regional consumption will grow again, with the trade deficit under control. In November, the accumulated trade balance registered a deficit 13.5% lower than in the first 11 months of 2019 (-12.4 thousand t).
The Latin American Steel Association (Alacero) wants to advance some results of a new research carried out by Professor Dr. Germano Mendes de Paula, which will be released soon. The study warns about the risks of competitive differences in Argentina, Brazil, Colombia, and Mexico with countries in Asia such as South Korea, India, Vietnam and, especially, China. It also draws attention to the risk this represents for the metal-mechanic value chain of the steel industry in Latin America. The document, entitled “Competitive Asymmetries, Deindustrialization, Steel Chain and Industry”, shows how these differences in competitiveness variables such as taxation, education, logistics and financing are undermining the future of the steel industry in the region. In this context of great competitive asymmetries, the defense of the metal-mechanical chain and the steel industry in Latin America is essential to maintain activities that have high levels of linkage and generation of high-quality jobs.
“In 2019, according to information provided by the aforementioned research on the impact of direct and indirect steel imports from China, the continued loss of jobs in the Latin American metal-mechanic chain due to deindustrialization is a topic that we must consider critical. Alacero calls for strengthening economic recovery by promoting private and foreign investment, reducing country costs in aspects such as taxes and logistics, stimulating infrastructure and strengthening the metal-mechanical value chain, which should reduce competitive asymmetries existing,” said Francisco Leal, General Director of Alacero.