Latin American steel industry remains stable driven by exports - Alacero
Latin American steel association Alacero reported that the expectation of concretion of the Brexit, the entrance of Brazil in the OECD and Colombia in just a step of following the same way, are factors that are transforming the global commerce and the geopolitical dynamics. In the midst of the threat represented by the commercial dispute between the United States and China and the crisis in Venezuela, the main economies of Latin America are going through unique moments in their histories. Argentina due to an economic crisis, price freezes and rate increases, Brazil with the expectation of the financial market before pension reform, and Mexico towards a scenario of deceleration and readjustment in its projections that shows greater uncertainty. The projection for industrial production for the year decreased in most of Latin America and the Caribbean countries in April, and the expectation regarding consumer prices in the region also declined in most of the countries, except in Brazil and Argentina. Although the region's steel market during January to February 2019 showed a 3% drop in the consumption of finished steel compared to January to February 2018, the regional production of crude and finished steel in March fell by 11% and 8%, respectively compared to March 2018, showing precisely global and regional economic uncertainties. Although the region decreased its imports by 6% between January and February 2019, it was identified a 2% increase compared to January-February 2018. The share of imports in regional consumption also increased: regional consumption is now supplied in 36% by such imports, as opposed to 34% in January to February 2018. The deficit recorded in January to February 2019 was 2.1 million tonne, which represents 61 thousand tonnes more than January to February of the previous year (2.0 million tonne). Despite negative oscillations in the same period of 2018, which came by the variation in consumption and market uncertainties, the overall production of crude and finished steel grew 3% and 12%, respectively, in March compared to February.
Crude Steel - Latin America had a production of 5.2 million tonne of crude steel in February, 11% lower than that registered in the same period of 2018 (5.8 million tonne). Considering the accumulated in 2019, it was produced 10.3 million tonne, 2% less than ENE-MAR 2018 (16.3 million tonne). In the year, Brazil is the main producer with 8.3 million tonne, representing 54% of the regional total.
Finished steel - It was produced 4.5 million tonne of finished steel in March, 8% less than the same period of 2018. In the accumulated of the year it was registered 12.7 million tonne, representing a fall of 7% compared to the first 3 months of 2018 (13, 6 million tonne). The main producers in the year are Brazil 5.6 million tonne (44% of the Latin American total) and Mexico with 4.5 million tonne (36% of the Latin American total).
Imports - In February, 1.8 million tonne of finished steel were imported, 8% more than in February 2018 (1.7 million tonne). In the cumulative of January to February 2019, Latin America imported 3.8 million tonne of finished steel, 2% more than the imported in the same period of 2018 (3.7 million tonne). Of this total, 70% correspond to flat products (2.6 million tonne), 27% to long products (1.0 million tonne) and 3% to seamless tubes (123 thousand tonne). Currently, finished steel imports represent 36% of the region's consumption, which brings with it disincentives for the local industry, commercial frictions and puts employment sources at risk.
Exports - In February, 761 thousand tonnes of finished steel were exported, 10% less than in February 2018 (843 thousand tonnes). In the cumulative January to February, Latin American finished steel exports were 1.68 million tonne, 1% more than in January to February 2018 (1.67 million tonne) and 10% less compared to February 2018 (843 thousand tonnes). Of this total, 45% correspond to flat products (756 thousand tonne), 44.7% to long products (750 thousand tonne) and 10.3% to seamless tubes (173 thousand tonne).
Trade Deficit - In February 2019, the region registered a trade deficit by the volume of 1.06 million tonne of finished steel. This imbalance is 25% higher than in February 2018 (0.85 million tonne), and 3% higher than in January 2019 (1.03 million tonne). Brazil is the only country that maintains a surplus in its finished steel trade in January-February (594 thousand tonne). Conversely, the largest deficit was recorded in Mexico (-1.1 million tonne). It was followed by Colombia (-362 thousand tonne), Peru (-316 thousand tonne) and Chile (-273 thousand tonne).
Source : Strategic Research Institute