Raw economic data for the first month of 2006 is still not available for many of the economic criteria. The overwhelming concern at this point is a resurgence of the region's past nightmare - inflation. This is especially worrisome for Argentina and Venezuela. The rates are highest here despite price controls in effect in both countries.
Consumer Prices in January 2006 (annualized rates): Argentina + 12.1%
Brazil + 5.7%
Chile + 6.0%
Colombia + 4.6%
Mexico + 3.9%
Peru + 1.9%
Venezuela + 13.1%
Argentina maintains their low currency exchange rate to the US dollar ($1 = 3.07 Peso). This gives their export a competitive edge but import prices remain high and the Argentinean Central Bank has to print more pesos in order to buy US dollars. Both of these factors contribute to inflationary tendencies.
Venezuela takes in record amounts of money because of the oil price windfall. But government expenditure remains high, even when we account for the spiraling prices in January. At least the poverty rate seems to have fallen a bit. For the first time in the last 16 years, the households in poverty rate has dropped just under 40 percent. Venezuela is beset with infrastructure problems, the biggest one being the closure of the main highway from Caracas to the principal airports on account of a damaged bridge.
The International Iron and Steel Institute (IISI) published the January steel production figures for the Americas. Here are the highlights and the comparison to January 2005.
Crude Steel Output in South America: 3.7 million mt, up 2.8%
Brazil: 2.6 million mt, down 0.5%
Argentina: 408,000 mt, down 0.5%
Chile: 140,000 mt, up 2.1%
Colombia: 80,000 mt, up 21.6%
Venezuela: 440,000 mt, up 28.1%
Peru: 80,000 mt, up 15.3%
Mexico: 1.3 million mt, down 3.3%
North America (incl. Mexico): 10.9 million mt
Steel merges / takeovers in the Americas: In the wake of the Mittal bid for Arcelor, there is a lot of speculation regarding mergers and acquisitions of Latin American mills. In its quest to be the dominant Latin American steel producer, Ternium (with mills in Argentina, Venezuela and Mexico) has been cited as one of the primary players in this development. But of course Mittal Steel and even Thyssen in Germany have been linked to takeover rumors. Mills in Mexico seem to be a preferred target, because some of them are still family owned and because of the proximity to the US steel market. Major developments are expected in the next three months.