Sharing is caring

Alacero – São Paulo, Brazil, November 18, 2020. The economic recovery in Latin American countries has been very diverse, but a common feature is the resilience of the steel-consuming sectors, an essential material that not only participates in the recovery but is one of its growth engines.

Latin America: Steel production reaches pre-pandemic levels
Latin America: Steel production reaches pre-pandemic levels

In this context, steel production reached pre-pandemic levels after a strong recovery in consumption in all sectors, as well as in civil and automotive construction, especially in Argentina and Mexico

Crude steel production down in September

Although the result of crude steel production in September, totaling 4,686 million tons (Mt), represented a decrease of 2.5% compared to August, the decrease was only 0.2% compared to the value registered in the same period of 2019. In this period, blast furnace production decreased by 7.1% (2,408 Mt) compared to August, while electric furnace production reached 2,278 Mt, an increase of 2.9%.

Rolled steel products up 4.6%

In rolled products, production in September increased by 4.6% compared to August, mainly due to the positive performance in Brazil, Mexico and Peru. However, the increase was not sufficient to halt the 6.5% year-on-year decline. Production of seamless tubes grew by 7.3%, followed by a 6.7% increase in flat products and 2.8% in long products.

Steel consumption in Latin America grows in August

In August, steel consumption in Latin America grew by 5.3% compared to July, mainly due to developments in Mexico, Chile and Argentina, which recorded growth of 10.9%, 19.8% and 9.5%, respectively. Flat products accounted for 47.3% of the recovery, long products 43.2% and seamless tubes 9.5%. Due to the pandemic, destocking to maintain cash flow was a direct result for many steel producers, as there was no horizon for the market to resume.

Sudden increase in steel demand

However, with the sudden increase in demand, value chains need to normalize, reorganize and have time to adjust. “The recovery in the countries of the region has been very different, which can lead to an uneven return to normality and requires predictability, without panic, on the part of the consumer sectors so that steel mills can resume their work,” said Francisco Leal, general director of Alacero.

In August, the 37 thousand tons of imports compared to the previous month and 58 thousand tons less in exports caused the deficit to increase from 746 thousand tons in July to 841 thousand tons in August. However, in the year to date, after a cumulative decline in the trade deficit of 15.7%, imports fell by 2,710 Mt and exports by 1,068 Mt. Although it is a moderate decline, the low export indicates a reorientation of the industry to local consumption and the normalization of stocks.

Steel industry operating at only 60%

Despite the relative improvement in the steel market, the industry is operating at 60% of installed capacity, which is higher than the 45% registered in April, but far from the 80-85% that would be necessary to operate in better operational and financial conditions.

Alacero further reports that the current situation shows that a possible wave of imports should be expected. Which may arrive under unfair trade conditions and cause distortions in the gradual recovery of demand.

Current challenges in the steel market

The short-term challenge, according to Alacero, is to expect better conditions so that the entire value chain can resume full activity. “This recovery shows that we are closer than ever to being able to reindustrialize the region by integrating new value chains that are geographically closer to raw materials and markets,” Leal added.


Sharing is caring

Related News

Receive all the latest news once a week

Receive all the latest news once a week

Make it easy for yourself: we will remind you once a week about the latest news.

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!