Latin American Steel Association (Alacero), in collaboration with Organization for Economic Co-operation and Development (OECD) and National Chamber of the Iron and Steel Industry of Mexico (Canacero), published a report on the unfair steel trade practices by China and Southeast Asian countries. According to the report, China floods markets with artificially low-priced steel through comprehensive direct and indirect subsidies that distort fair competition.
The Alacero report identifies China's subsidy system operating across three phases. Initially, steel companies receive subsidized loans, land and infrastructure subsidies, state-directed acquisitions, construction subsidies, and below-market raw material prices. During production, they benefit from subsidized suppliers, limited foreign competition, free or subsidized energy, tax exemptions, subsidized financing from state banks, and guaranteed contracts. For exports, they receive logistics subsidies and benefit from regulations in allied countries mandating Chinese steel purchases.
The report highlights that these subsidies create significant problems such as distorting competition, reducing efficiency incentives, increasing state dependence, and risk of creating overcapacity through overinvestment that exceeds market demand. Canacero also notes policy inconsistency as sustainability subsidies coexist with continued coal support.
According to the report, Chinese investment in ASEAN countries has added 10 million mt additional steel production capacity over five years across Thailand, Malaysia, and Indonesia. Alacero found that out of 63.51 million mt of Chinese steelmaking capacity in ASEAN, 96.3 percent received government subsidies, reflected by Indonesia reversing its trade balance from importing to exporting steel within five years.
Alacero and OECD project global overcapacity reaching 721 million mt by 2027, potentially devastating the industry worldwide. Over the next two years, excess capacity will increase by 165 million mt, while consumption grows only 46 million mt, with China, India, and ASEAN accounting for 56 percent of this excess.
The report shows that Latin America has been severely impacted by unfair trade applications. Chinese steel exports to the region grew 233 percent over 15 years, while indirect steel exports increased 338 percent between 2008-2024. Import share within consumption reached record levels at 39 percent in 2024. According to Alacero, Latin America implemented 79 trade measures between 2010-2023, with 51 percent targeting China and ASEAN, though the association notes effectiveness has been limited due to long implementation times.
The collaborative report emphasizes steel's essential role in Latin American development and Alacero called for urgent coordinated regional responses. Alacero advocates for industrial development policies promoting regional value chain integration and protecting 1.4 million jobs dependent on the steel industry, demanding more agile, forceful, and regionally aligned trade defense actions to restore fair competition.