After being affected by the pandemic, Latin America shows signs of a gradual recovery. The steel industry in the region reflects this trend, reigniting furnaces and expanding its steel operations. So far, in some countries the reactivation has a “V” shape, although it is far from returning to the levels prior to the Covid-19 crisis.

In this scenario, the numbers of crude steel production in August maintained a positive trend, totaling 4.807 million tons (Mt), which represents an increase of 7.9% compared to the previous month (July 2020).

Despite the increase in production for the month, driven by Brazil, Mexico and Argentina, the result was 2.4% below August of last year. As for rolled products, the production of long steel increased 9.5% during the month; that of plans, 15.9%. However, the production of seamless tubes remains depressed. Even with the 17.9% increase compared to the previous month, production was 63% lower than in August last year.

Latin American steel consumption grew 2.9% in July compared to the previous month, mainly due to the performance of Argentina, Colombia, Mexico and Brazil, which registered its best month of the year. However, it decreased 19.7% in comparison with the same month of 2019, and had a year-on-year decrease of 15.4% from January to July.

The reduction in imports contributed to an improvement in the trade balance, whose deficit reached the lowest level since October 2011. “To keep up with the increase in demand, the industry is recovering with greater production, reigniting blast furnaces and increasing steel production, ”said Francisco Leal, general director of Alacero.

Increased decoupling of global chains due to trade disputes 

With the application of a restrictive policy by the US government in the face of commercial tensions with China, and the higher production costs, the process of fragmentation of global value chains by national relocation has been accentuated. In this scenario, we reiterate that it is a current mission of governments to promote competitiveness, institutions and infrastructure to attract investments at a critical moment, when there are opportunities for Latin American countries.

In this context, Mexico is a logical option for nearshoring due to its proximity to the United States market and the existence of the T-MEC with that country and Canada. Colombia could also benefit from the favorable time zone and the prospect of medium-term economic improvement, which could occur with other countries in the region.

To take advantage of these benefits and development opportunities in the region, it is necessary for governments to stimulate the interest of national and foreign investors through promotion and promotion strategies, economic stability and respect for the rule of law.

About Alacero 

Alacero - Latin American Steel Association - is the non-profit civil entity that brings together the Latin American steel value chain to foster the values of regional integration, technological innovation, excellence in human resources, safety at work, corporate responsibility and socio-environmental sustainability. Founded in 1959, it is made up of more than 60 producing and related companies whose production is around 60 million tons annually. Alacero is recognized as a Special Advisory Body by the United Nations.