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China's Steel Export Impact on Latin American Steel

Steel News - Published on Mon, 28 Sep 2020

Image Source: Latin American Steel Strategic Research Institute, SteelGuru
Latin American steel association Alacero announced that the main economies are experiencing a recession while trade tensions between the world's greatest powers may be heading towards a different stage of the economic crisis unleashed by the appearance of Covid-19. Falling commodity prices , currency devaluation, US protectionism, and pressure from China's uncompetitive prices on local production contributed to the uncertainty in the region. During 2019, Chinese exports of indirect steel trade to Latin America grew by 3.5%, reaching USD 49,154 million. The volume of steel in products that entered from the Asian giant increased by 3% compared to the previous year, which represents close to 7.0 Mt. In this context, and as a way of maintaining the level of industrialization of the Latin American steel industry, Alacero recommends that local governments have greater commercial control over imports, in order to combat unfair trade. After the pandemic, the trend is for global demand to favor countries with enough overcapacity to resume low-cost production.

Brazil and Mexico are the main consumers of indirect steel in China, with 57% of the total imported in value by the region. In tons, its representativeness is close to 45%. Mexico, despite the low imports of rolled steel from China, was the main indirect trade market with USD 17,157 million, a growth of 5.8% compared to 2018. In total, Brazil had a growth of 4.5% in spending, reaching USD 11,068 million. Chinese exports to Latin America of products included in the indirect steel trade reached 7.0 million tonnes in 2019. Among the products that reached the region, cars and commercial vehicles contributed 1.22 million tonnes, reaching the most significant share in dollars ( USD 9,454 million, that is, 19% of the total).

The main destinations of rolled steel and derived products from China to Latin America were Chile, which received 1.2 million tonnes (20% of the regional total), Peru (1.1 million tonnes, 17%), Central America (1.0 million tonnes, 16 %) and Brazil (0.8 million tonnes, 13%). Overall, the region had a 14% drop in its imports. The increase in indirect trade in Chinese high-steel products to Latin America, however, was not enough to increase the trade deficit. Thus, the exchange of rolled products and derivatives between China and Latin America showed a sharp fall, despite the fact that total steel imports to China from Latin America, which include rolled products (long steels, flat steels and seamless tubes) and derivatives (wire and welded tubes), reached 0.018 million tonnes, 56% more than in 2018 (0.012 million tonnes).

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Posted By : Yogender Pancholi on Mon, 28 Sep 2020
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