During the opening of the new headquarters in São Paulo, Alacero launches report “Latin America in Figures 2018”

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Alacero - São Paulo, Brazil - October 1, 2018.
Publication gathers data from the steel industry in the region and marks the opening of the new headquarters of the Latin American Steel Association
After almost six decades installed in Santiago, Chile, Alacero moves its headquarters to São Paulo, Brazil, considered by the association as a hub of Latin America. Besides it is the operational address of some of its
main associates. According to the president of Alacero, Jefferson de Paula, “having our base in São Paulo is a strategic decision in several aspects. It means to be present in the main steel market of the region and in a world-class industrial center. This will allow us to intensify and strengthen our relationship with our entire value chain”.
Despite the scenario of internal and external uncertainties, Brazil presents robust figures and good prospects. It is the region’s largest crude steel producer, with 53% of the total production. The country is expected
to close the year with a production of 35 million tons of crude steel, up 2 percent from last year.
For Latin America, the expectation is that 2018 will finish with a crude steel production of around 66 million tons. A rise of 3.2% over last year. During 2017, the Latin American Steel Industry began to show more favorable conditions for the recovery of production and a moderate increase in prices in the Latin American steel market. Although still far from the ideal growth rates, there is optimism about a more consistent GDP recovery and by extension, demand for steel. Even with the political uncertainty in the region’s major economies, aggravated by the growing trade tensions arising from the United States’ trade protection policy and Argentina’s strong financial crisis, Latin America has been benefited from the global economic growth and the high commodity price levels.
According to International Monetary Fund (IMF) estimates, GDP growth in the region in 2018 will be 1.2%, maintaining practically the same pace of last year. It would be the second consecutive year of moderate recovery since the recession 2015-2016. For 2019, it is expected a 2.1% growth in the region, mainly as the result of a more consistent economic recovery in Brazil, Mexico and Colombia.
Francisco Leal, who has just assumed as the general director of Alacero, highlights the importance of the sector. “We at Alacero believe that the steel industry is one of the pillars of Latin American economic and social development. We also know that the current levels of per capita steel consumption on the continent remain well below the world average and that we have a long way to change this scenario”. For Alacero, although positive, Latin American economic data remain very discreet when compared to the potential of the region.

Apparent consumption

In 2018, apparent steel use will reach 68.5 million tons (Mt), while rolled steel production will reach 55.9 million, 1.3% and 5.6% higher than in 2017, respectively. Forecasts include an increase of 3.9% in world
consumption and of 6.0% in China.

Imports and Impact of China

Imports into the region remain one of the main problems. Total imports of rolled steel from Latin America will reach 23.5 Mt, a decrease of 6% compared to 2017, mainly due to China’s lower export balance.
However, the share of imports over consumption remains high, and it is expected to reach 34% by the end of 2018. This situation occurs and worsens year after year, creating disincentives to local industry, trade frictions
and unemployment threats. In addition, in many cases, these products enter the region at dumped prices from countries with “nonmarket” economies, which subsidize steel production and provide financial facilities, outside World Trade Organization (WTO) guidelines.
In 2017, China shipped 7.0 million tons of steel to the region. Since 2015, regional governments, in cooperation with steel companies, have strengthened their efforts to level the playing field, establishing anti-dumping
and trade defenses, seeking to ensure the international competitiveness of the sector.
Currently, Latin America has 66 trade defense lawsuits, 44 against China.