According to Alacero, the Latin American steel association, Latin American steel consumption continues to grow due to the recovery in demand and the rebuilding of stocks, both by consumers and in the distribution chain. In January this year, steel consumption in Latin America increased for the ninth consecutive month by 0.8 percent compared to the previous month and was up by 12.7 percent year on year, totaling 6.09 million mt. The steel consumption level returned to pre-pandemic levels in January.
Brazil was the largest contributor to the improved steel demand performance, with an 8.8 percent increase, recording a fifth consecutive month above two million mt. Argentina also showed a rise in January consumption compared to December 2020, up 10.8 percent.
In January this year, Latin American countries’ steel imports increased by 5.7 percent year on year, while their steel exports fell by 27.3 percent compared to the same month last year as the industry focused on supplying the local markets. In the given month, Latin America’s steel imports accounted for 35 percent of regional consumption, up from 33 percent recorded in 2020. The steel exports in the given month were 12.4 percent lower than December 2020 and accounted for only 11.4 percent of regional production in January, below the 15.6 percent share in 2020. As a consequence, there was a worsening of the trade balance deficit, which had already been registered in November and December.
In the January-February period this year, Latin American crude steel output totaled 10.21 million mt, increasing by 3.9 percent year on year, while rolled steel production in February rose by 3.4 percent year on year and two percent compared to the previous month, reaching 4.18 million mt.
The short-term outlook is favorable for strengthening steel demand in the region. According to the International Monetary Fund (IMF), in 2021 the global economy is forecast to grow by six percent, developed countries by 5.1 percent, emerging economies by 6.7 percent, and Latin America by 4.6 percent; in the region, Brazil stands out with a rate of 3.7 percent, and Mexico with five percent.
“We are facing a period of uncertainty and are in the process of getting the balance between demand and production right. However, at this time, we must take care of market conditions in the face of the growing threat of imports and the increasing trade deficit. The macroeconomic recovery should accelerate in the second half of the year, and we expect production to maintain its upward curve and consumption to sustain its growth at the regional level, with the trade deficit under control,” Francisco Leal, chief executive of Alacero, said.