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Latin American steel industry challenged by high production costs

Tuesday, 24 December 2024 02:32:39 (GMT+3)   |   Sao Paulo

According to Ezequiel Tavernelli, Executive Director of the Latin American steel association, Alacero, the steel industry in the region is facing challenges related to stagnant demand and high production costs.

In his view, although countries like Brazil and Mexico demonstrate greater resilience, others depend on raw material imports, which makes them vulnerable to global market fluctuations.

He added that the low effectiveness of structural reforms makes it difficult to attract investment and modernize infrastructure, putting the sector's competitiveness at risk. 

Speaking at the Alacero conference in November, Tavernelli mentioned that the region is facing a scenario where steel demand is declining in 2024 by 2.7 percent from 2023 to 71.8 million mt, while on a comparative basis the crude steel production is declining by 3.6 percent to 56.3 million mt, in a context where the demand declines while imports increase, reinforcing the view that the region must adopt strategies to reinforce the local industry, in addition to the measures that were already adopted, such as the systems of quotas in Brazil.

Chinese steel exports, mostly sold at artificially low prices, are considered as one of the most significant challenges to the Latin American steel industry, flooding the local markets and “undermining local producers who cannot compete with the artificially low prices”, in Tavernelli’s words.

The expected crude steel production of Latin America in 2024, 56.3 million mt, is extremely concentrated in Brazil (61 percent), Mexico (24 percent), and Argentina (8 percent), with the balance 7 percent divided among Peru, Colombia, and Chile.


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