Latin American steel association Alacero said in a press release today that the steel market in Latin America has returned to pre-pandemic production levels. Alacero said the market is following a regularization process in which the production of rolled steel is evolving favorably in view of the demand recovery, although imports continue to pose a risk to steel companies’ production and performance.
Alacero said the momentum of steel demand in the region continues to favor the regularization of steel production, in which the accumulated volume of rolled steel until March was 13.46 million mt, 6 percent higher than the same period of 2020, and 4.1 percent above the level of the same period in 2019.
In the monthly comparison, there was an increase of 11.5 percent compared to March 2020 and 13.1 percent in February 2021, led by Mexico (33.1 percent). The results were the same since April 2018, when there was no pandemic. Seamless tubes stood out with a production increase of 24.2 percent (96,700 mt), followed by long tubes, with an increase of 16.7 percent (2.45 million mt), and flat tubes, whose production increased 8.9 percent (2.16 million mt).
The consumption of laminated products, especially in the construction and manufacturing sectors of the three main Latin American economies (Mexico, Brazil, and Argentina), was reflected in increases of 2.7 percent and 13.2 percent compared to 2019 and 2020, respectively, totaling 5.58 million mt.
In February, imports registered a 13.3 percent increase compared to the same month of 2020 but fell by 7.4 percent compared to last January; even so, they continued to represent 35 percent of regional consumption, Alacero said, adding that the current month of May could be a possible point of import resumption, aiming to reach the levels of previous years. The situation should be closely monitored by governments to avoid a sudden growth affecting regional production, Alacero said.
Regarding exports, the region registered a reduction due to the recovery of local demand. The number of February was similar to that of January (-0.5 percent) and 22.9 percent lower than that of February 2020. The trade balance decreased by 9.7 percent compared to the previous month, with a negative balance of 1.4 million mt.
“It is important to pay attention to the recovery of local production levels to supply demand, since it represents the fastest way to regularize the steel market situation,” said Francisco Leal, Alacero’s Director General. “The expectation is that production will continue on a positive path as regional consumption consolidates and the trade deficit is under control in the second half of the year.”
On the other hand, Alacero said information from the OECD Steel Committee confirms once again that the global steel production capacity problem is still present, and that Latin America is not part of this problem. According to the committee, “the world’s raw steel production capacity increased by 38.1 million mt in 2020, or 1.6 percent, despite extremely poor market conditions. Over the past two years, global capacity has grown at a total of 74.2 million mt, with Asia and the Middle East accounting for almost all of this increase.”
Alacero also pointed to major challenges to continuous economic reactivation in Latin America. Among the main ones are the start-up of plants and suspended projects, the economic and financial support to combat the effects of COVID-19, the reduction of high unemployment rates, the strengthening of public health systems, the encouragement of national and foreign investments, political stability, and respect for the rule of law. Alacero said it is important that countries focus their efforts on overcoming these issues so that they can consolidate the ongoing recovery.