Despite the challenges Latin America’s steel industry faces, with increased imports from China flooding most nations and affecting intra-region trade, countries like Colombia see positive signs for the years to come that could boost the nation’s steel sector, according to Carlos Arturo Zuluaga, CEO of Colombian steelmaker Acesco.
In an exclusive interview with SteelOrbis during the Alacero conference in Buenos Aires, Argentina, this week, Zuluaga pointed out that apparent steel consumption in Colombia is expected to increase 1 percent in 2015, from a 13.4 percent rise last year, while local GDP will grow 2.4 percent this year.
“Colombia has some great perspectives ahead in a wide range of topics, from fiscal policy, with the government earnings from the oil sector, to major infrastructure projects,” Zuluaga said. “There has been a strong investment in the country in the civil construction sector. This gives us a solid hope that there will be some growth in Colombia.”
Colombia has already spent $12 billion in infrastructure projects, and is currently studying a new customs policy, with faster AD mechanisms, which are expected to prevent circumvention practices.
Another issue, which has been carefully observed by the local steel segment, is the nation’s peace process, as the Colombian government and the country's largest left-wing rebel group, the Revolutionary Armed Forces of Colombia (Farc), are now trying to end more than five decades of armed conflict.
“We hope we’ll advance in the peace process next year,” Zuluaga said. “There has been some uncertainty regarding this issue, but we believe that will be a move that will make the country move forward.”
Zuluaga said Acesco, which also has mills in Puerto Rico, Costa Rica, Panama and Ecuador, is now experiencing some decline in the utilization of its capacity. “As a result of the strong competition we’re facing from China, we saw a reduction in our capacity to produce galvanized products,” he said. “That also caused us to import some steel.”
Despite the challenges—China was a constant topic in most conversations in the Alacero conference—Acesco is confident in the good performance of its businesses.
“We’re shifting the focus of our business,” said Acesco’s CEO. “We’re now focusing much of our efforts in the civil construction segment, as we see positive perspectives in such a sector.”
Zuluaga said about 35 percent of the group’s production is destined to the export market. In Colombia, exports account for about 15 percent of the company’s production volume, while in Costa Rica such a figure reaches 40 percent. “We’re heavily focused in the Central America export market, but it’s has been tough to compete with China,” he said.
Commenting the Trans-Pacific Partnership agreement, Zuluaga said the steel market is “still looking at it to see how this will development.”
“There are some issues that still need to be addressed, but China is also working on its own agreement,” he noted.
During a panel with other CEOs during the conference, Zuluaga said that despite a challenging economic situation in Colombia, as the local currency devaluated about 39 percent since January this year, “there’s space for a moderate optimism.” However, the China issue should be addressed with a joint interaction from both the public and private sectors.