The Latin American steel industry foresees a positive scenario with attention points
Highlights of Latin America in 2018:
65.1 million tons crude steel production
53.7 million tons of rolled steel production
67.0 million tons of apparent steel consumption
10% decreased imports of Latin American steel
8% decreased exports of Latin American steel
Alacero - Sao Paulo, Brazil, March 7, 2019. Following the pace of the slowdown in the economy compared to global markets, the low consumption per capita and the barriers that deteriorate its iron and steel market, Latin America has suffered falls in its trade while maintaining a trend of improvement in the deficit of the trade balance.
In the year of 2018, the consumption of finished steel fell 1% while the production of crude steel and finished steel rose by 3.4% and 1.6%, respectively, compared to 2017. It should be noted that it was positive that this increase gone to replace imports, whose annual share fell 3% Earlier this year, in January, crude steel production grew 2.2% in the same comparison in 2017, reaching 5.4 million tons.
Domestic consumption in 2018 was attended by 33.8% for imports, which decreased 9.7% compared to 2017. The trade balance remains negative, but the deficit in tons has fallen 11% compared to 2017.
“Consumption and exports were the main drivers that kept the activity of the region in the last year. In 2019, the greatest contribution will come from the construction and infrastructure creation sector, despite the fact that most countries expect moderate growth, since this sector has the greatest capacity and growth potential, “said Francisco Leal, general director of Alacero.
Production grows with Brazil maintaining its leadership
Crude steel. Latin America and the Caribbean presented a production of 65.1 Mt, 3.4% more than in 2017. Brazil continues to be the main producer with a 53% share in the total produced in the region (34.7 Mt), a 1% increase in relation to 2017. Latin American crude steel production reached 5.4 million tons in January 2019, representing an increase of 2% compared to the same month last year.
Finished Steel. The region produced 53.7 Mt of finished steel, 2% higher than that achieved in 2017. Brazil is the main producer with 23.1 Mt, 43% of the Latin American total, a share that increased 3.2% compared to 2017. Mexico is still in second responding by 35%, with 19 Mt. For January we still do not have complete information to report.
Consumption of finished steel slows down
In 2018, the region recorded a 67 Mt consumption of finished steel, decreasing 1% vs 2017. The countries with the highest decreases are: Mexico, Peru and Costa Rica which registered falls of 3.2% (-0.9 Mt), 16.4% (-0.6 Mt), 11.2% (-0.1 Mt) respectively, not counting Venezuela where we do not have accuracy of the information. The main countries that increased their consumption, both in absolute terms and in percentage terms, were Brazil (1.4 additional Mt and 7.3%), Paraguay (0.12 Mt and 35.9%), and Colombia (0.1 Mt and 0.6). %). Of the Latin American total, 56.5% correspond to flat products (37.9 Mt), 42% to long products (28.0 Mt) and 1% to seamless tubes (1.0 Mt).
Latin American balance remains in deficit
In 2018 the trade balance, despite of still being negative, saw the deficit decline 11% compared to 2017 (14.5 Mt) closing the year at 12.9 Mt. During 2018, Brazil and Argentina were the only countries that maintained a surplus in its finished steel trade, 2.4 Mt and 0.8 Mt, respectively. By contrast, the largest deficit was recorded in Mexico (-6.6 Mt). It was followed by Colombia (-2.4 Mt), Chile (-1.6 Mt) and Peru (-1.6 Mt).
Imports. In the last year, Latin America imported 22.7 Mt of finished steel, 10% less than in 2017 (25.1 Mt). Of this total, 70% correspond to flat products (16.0 Mt), 27% to long products (6.1 Mt) and 3% to seamless pipes (0.6 Mt). In December 2018, imports of finished steel from the region increased by 9% compared to the same month of 2017, totaling 1.9 Mt.
Currently, imports of finished products represent 34% of consumption in the region, however, we came from a 30% share in 2013 with a growth rate that until this year was interrupted by a decline. It is striking the quarterly chart showing again a trend in the 4th quarter of 2018 whererose to 36% coming from 34%. It is urgent to take care of this in our region since it brings with it disincentives for the local industry, commercial frictions and puts investments and jobs at risk.
Exports. Latin American exports of finished steel reached 9.8 Mt, 8% less than in 2017 (10.6 Mt). Of this total, 44% correspond to flat products (4.3 Mt), 42% to long products (4.1 Mt) and 14% to seamless tubes (1.3 Mt). The evolution of trade flows and the balance are presented in Graph 04
Production advances at the beginning of the year of 2019
Information from January 2019 indicates that crude steel production reached 5.4 Mt in the month, 8% more than in December 2018 and 2.2% more than in January of the same year.
“Everything indicates that the investment is no longer hindered by the arrival of new governments in Brazil and Mexico, which is expected to be an important factor behind the acceleration of production this year and in the next year. Inflation has been significantly reduced in 2018 in many countries, which provides some leeway to facilitate monetary policy, “ says Leal.
With domestic consumption and exports guaranteeing the growth of the Latin American steel industry, it is expected that, between 2019 and 2020, the apparent consumption of steel will gain momentum again, based on the greater tendency of investment in regional markets and in a greater confidence of the Construction and Industrial sectors.
Crude Steel: Steel in its most basic form, coming from the continuous casting process, (slap, billet etc.). To obtain the qualities necessary for usage, this kind of steel needs to pass posterior processes, like rolling etc.
Finished Steel: Refers to steel included in one of these 3 groups: Long products (e..: reinforcing bars, bars, wire rod, light sections, heavy sections, rails), flat steel (e.g.: sheets and coils, coated sheets, prepainted, stainless steel, chrome-plate sheets, hot dip galvanized sheet etc.) and seamless tubes.
Mt: Million Metric Tons.
Alacero –the Latin American Steel Association– is the organization that brings together the Steel Value Chain of Latin America to promote the values of regional integration, technological innovation, corporate responsibility, excellence in human resources, safe working environments, and social and environmental sustainability. Founded in 1959, Alacero is formed by 44 companies in 12 countries of Latin America, whose production of about 70 million annual tons.
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