Latin American steel production returns to pre-pandemic levels

Friday, 20 November 2020 15:11:57 (GMT+3)   |   Istanbul

According to Alacero, the Latin American steel association, Latin American steel production returned to pre-pandemic levels, following a strong recovery in consumption in all sectors, particularly in Argentina and Mexico. In September this year, Latin American crude steel production totaled 4.68 million mt, decreasing by 2.5 percent compared to August and down by only 0.2 percent year on year. In the given month, the crude steel production from blast furnaces came to 2.28 million mt.

In the same month, Latin American rolled product output increased by 4.6 percent compared to August, largely due to the positive performance in Brazil, Mexico and Peru. However, the advance was not enough to contain the 6.5 percent year-on-year decline. The production of seamless tubes rose by 7.3 percent in the given month, while there were output increases of 6.7 percent in flats and 2.8 percent in long products, all month on month. 

Latin American steel consumption rose by 5.3 percent in August when compared to the previous month, mainly due to the performance of Mexico, Chile and Argentina, which registered growths of 10.9 percent, 19.8 percent and 9.5 percent, respectively. Flat products accounted for 47.3 percent of the recovery of consumption, long products for 43.2 percent, and seamless tubes for 9.5 percent. Many steel producers reduced inventories to preserve cash flow due to the prevailing uncertainties. 

According to Alacero’s statement, with the sudden increase in demand, value chains need to normalize, reorganize, and have time to adjust. “The recovery in the countries of the region has been very varied, which can lead to an uneven return to normality and requires predictability on the part of the consumer sectors so that steelworks can resume their operational levels,” Francisco Leal, Alacero’s general director, said.

In August, Latin American countries’ steel imports totaled 37,000 mt and their steel exports amounted to 58,000 mt. In the January-August period, the countries’ steel imports fell by 2.71 million mt and their steel exports dropped by 1.07 million mt. Although a moderate decline, the decrease in exports indicates a reorientation of the industry for local consumption and the normalization of stocks, as SteelOrbis understands.

Latin American industry is working with 60 percent of its installed steel production capacity, despite the relative improvement in the steel market. The level is far from the 80-85 percent needed to work in better operating and financial conditions, Alacero stated.

Alacero noted that the current situation indicates that Latin American countries must be aware of the possible wave of imports that can arrive amid unfair trade conditions and cause distortions in the gradual recovery of demand. 

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