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China deepens the deindustrialization of Latin America

Steel News - Published on Fri, 17 May 2019

Image Source: Core Sector Communique
During 2018, Chinese exports of indirect steel trade to Latin America grew by 17%, reaching an impressive USD 47,468 million. The volume of steel in products that came from the Asian giant increased 12% compared to the previous year, close to 6.8 million tonne. Mr Máximo Vedoya, President of Alacero said that “China is a problem because of all the subsidies its industry receives. It generated a loss of employment and industrial development in other parts of the world where local industry can not compete. The world has sought to defend itself from the global overcapacity caused by China and countries have imposed measures to mitigate the effects of this unfair trade. But, Latin America is delayed in this process.”

Brazil and Mexico are the main consumers of indirect steel from China and represent 56% of the total consumed by the region. Mexico, despite the low import of finished steel from China, was the main indirect trade market with USD 16,210 million, a growth of 25% compared to 2017. Brazil had a growth of 37.6% in value spended, reaching USD 10,590 million.

Chinese exports to Latin America of products included in the indirect steel trade reached 6.8 million tonne in 2018. Among the products that arrived in the region, cars and commercial vehicles contributed 1.2 million tonne, reaching the most significant participation in terms of dollars (USD 9,098 million), 19% of the total.
 
The second most relevant category (in terms of value in dollars) was Office Machines of which Latin America received 42 thousand tonnes from China at a value of USD 6,564 million. The Machines and Equipment followed reaching the value of USD 5.763 million (532 thousand tonnes).
 
Finished steel and derivatives trade advances between China and Latin America

In 2018, Latin American domestic consumption suffered serious consequences derived from the uncertainties caused by trade wars and global protectionist measures. The exchange of finished steel and derivatives between China and Latin America continues to grow, but in very different proportions. Total exports of Chinese steel to Latin America, including finished products (long steel, flat steel and seamless pipes) and derivatives (wire and welded pipes), reached 7.3 million tonne, 4% more than in 2017 (7 , 0 million tonne).
 
In 2016, the region had 7% of China’s exports in the World, but now it reaches 11%. Latin America assumed the 2nd place of greatest destination of Chinese exports of finished steel. Mr Vedoya said that “As some parts of the world reacted against China’s unfair trade, the Asian giant went to other regions and Latin America remained the preferred one. That leads to our deindustrialization.”

The exchange of finished steel and derivatives between China and Latin America continues to grow, but in very different proportions. Total exports of Chinese steel to Latin America, including finished products (long steels, flat and non-consturated pipes) and derivatives (seamless wire and pipes), reached 7.3 million tonne, 4% more than in 2017 (7, 0million tonne ).
 
The main destinations of finished steel and products derived from China to Latin America were Chile, which received 1.5 million tonne (21% of the regional total), Central America (1.2 million tonne, 17%) and Peru (1.1 million tonne, 15 %). While Brazil was the fourth destination of these steel in the region with 1.0 million tonne and had a growth of 20% in imports. Followed by Colombia with 784 thousand tonnes, Ecuador with 535 thousand and Mexico with 502 thousand.
 
Flat products concentrated 72% of the total of finished and derivative steel from China to Latin America (5.2 million tonne), increasing its volume 10% versus 2017 (4.7 million tonne). The long products received from China reached a volume of 1.1 million tonne, 15% of the total and 11% less than in 2017 (1.2 million tonne).
 
The seamless pipes reached 278 thousand tonnes, while the derived products received by the region reached 688 thousand tonnes, fall of 9% according to the same comparison.
 
Imports represent 35% of the region’s consumption. Of these imports, 28% are due to China, an increase of 6.5% in the representativeness of Chinese imports in apparent consumption of Latin American.
 
The current anti-dumping cases show that there is a reaction in Latin America towards China’s Unfair Trade. Although the mechanism does not seem to be sufficient or effective against the paths of unfair competition that both China and other economies triangulate to Latin America.
 
Currently there are 65 anti-dumping steel cases in force in Latin America, of which 65% are against China (42 cases). Mexico and Brazil are the countries that most accuse China: of the 42 cases in force, 17 are from Mexico and 15 from Brazil, both represent 76% of China’s total cases in Latin America. Alacero discloses data on China-Latin America Foreign Trade with alarming figures

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Posted By : Sanju Moirangthem on Fri, 17 May 2019
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