The economic deceleration of China, a major export destination for Chile’s CAP Acero, as well as uncertainties in the nation’s economic scenario are hurting CAP’s subsidiary, according to media reports.
According to a media report, the president of CAP group, Roberto Andraca, said such external factors are impacting the company’s business, which reduced its revenues by 17.5 percent in 2014, year-on-year, to $549 million.
Andraca said other issues related to the economic, political scenario in Chile have also contributed to the difficult prospects for the steel-focused company.
“The cost [of energy] itself could easily make the steel industry [become] another loss for the nation’s industry,” he said, citing one of the problems the company faces. Another factor impacting the company’s perpetuity is the low-level iron ore prices reached in the past year.
Commenting on CAP Acero’s results in 2014, Andraca said the company hasn’t “reached its balance.” If current prospects continue, keeping the company’s perpetuity would be “unsustainable”, the executive added.
Last year, CAP Acero announced a reorganization of its steel business. Flat steel production was suspended at CAP Acero’s mill in Talcahuano, in the Biobío region, and then reduced after resuming, a media report noted. That decision was a result of a “distortion” of iron ore prices, according to Andraca.