Much has been said about China’s overcapacity of steel and the cheap exported products that flooded the Latin American markets in the past few years, and Mexico, the region’s most active market in terms of trade defense, has applied a number of duties on foreign steel imports.
But for Alacero’s general manager, Rafael Rubio, such short-term measures, which may bring some relief, won’t solve long-term, conjunctural issues.
“These are just provisional solutions,” he told SteelOrbis in the sidelines of the Alacero conference, held in Rio, Brazil, from October 25-26.
“I believe there are conjunctural problems we need to solve. Those anti-dumping (AD) or countervailing duties (CVD) last for five years. In some cases, they’re not renewed or don’t last for the intended period,” he said.
But the duties that prevent Chinese steel to enter Latin America have also affected several region’s countries, including Brazil and Mexico.
In September this year, for example, Mexico extended CVD on Brazilian rebar imports. Similarly, Chile applied provisional, ad-valorem AD duty over imports of Mexican rebar. “We can say that this is a natural process,” Rubio said.
“Those moves happen and are reproduced when markets [in the case, the Chilean domestic steel market] are in the low part of a cycle,” he noted.
Rubio said Latin America is still missing what Alacero has long hoped for: regional integration. “As a region, we couldn’t overcome those cultural, business, institutional and political differences.”
“The region hasn’t formally walked in that sense. But it could realize the benefits of what such integration would mean,” he said. “Mexico isn’t the only country that exports rebar to Chile. If the problem was just Mexico, then you could say, ‘oh, I’ve solved my problem’.”
But, he added, even if Mexico didn’t export rebar to Chile, there is still Turkey, Europe, Japan and China to contend with. “What we as a regional association want is an equal and fair competition.”
As for the outlook for the region in the year to come, Rubio said mills should be cautious, despite increased optimism.
As for the outlook for the region in the year to come, Rubio said mills should be cautious, despite increased optimism.
“I think most mills will be cautious,” he said. “An investment in the steel sector doesn’t take just one year, they are actions that require two or more years.”