The marked decline in domestic steel production coupled with increased imports of Chinese steel have hampered the Latin American steel market recovery. The production restart by Chinese mills after lockdown will likely boost exports of excess steel capacity to the region.
According to latest figures published by the Latin American Steel Association (ALACERO), the crude steel production by the region registered a decline by 8% during the initial quarter of the current year. The steel output by Argentina reported 27% year-on-year decline in March this year, impacted by nationwide lockdowns on account of Covid-19 pandemic. Meantime, exports fell by nearly 15%, in line with the ongoing weakness in steel demand across the globe.
The countries in the region had to reduce their production or stop operations amidst pandemic spread. The sharp decline in industrial and construction activities led to 2.4% contraction in Mexico’s GDP. The Brazilian industrial activity witnessed over 9% slump. The manufacturing activity in Argentina reported notable decline in March. All these have resulted in significant drop in apparent steel consumption by the region.
