At the 75th Organization for Economic Co-operation and Development (OECD) Steel Committee meeting held recently in Paris, Alacero, the Latin American steel association, said the current situation in the steel industry is becoming critical as global overcapacity reaches more than 500 million mt, which represents 36 percent of annual apparent steel use.
According to Alacero, overcapacity is driving exports up and prices down. These facts, along with the global demand slowdown and the risk of a rise in raw materials prices, are pressing on private companies' profitability and are leading to increased trade frictions.
In the case of Latin America, Alacero noted that, after being a net finished steel exporter, the region has become a net importer. Massive imports, many of them under unfair trade practices, are driving antidumping measures up. Currently, 52 investigations are underway in different countries of the region, 23 of them against Chinese companies. Also, 78 antidumping measures are already in place, 43 of which are against China.
In conclusion, Alacero made some recommendations to improve the situation in the Latin-American steelmaking industry and build an economically sustainable future for the region. Alacero said that, at government level, the overcapacity problem should be addressed with an integral approach. Policies that level the playing field against the state-owned enterprises, accounting for 50 percent of the top 46 steel companies, and almost all of them belong to China, should be an important element of this approach, as private sector companies cannot compete with governments. In addition, Alacero said it is also necessary that Latin American governments take effective and immediate actions against unfair Chinese imports.