Latin America's steel industry must strengthen its trade defense to shield off unwanted imports and boost its intraregional trade to grow, speakers in the opening sessions of Latin American steel association Alacero’s annual event in Buenos Aires said Oct. 29.
Stronger defense will help finance mills’ decarbonization processes, and lead to greater supply chain integration within the continent, speakers at the conference said.
“Latin America needs to do the same as the United States and the European Union: use pragmatic trade defense,” Rafael Lucchesi, industrial and economic development director at Brazil’s National Industry Confederation (CNI) told delegates at the event. While trade barriers could be inflationary, pragmatic protectionism tied to productivity gains could help provide financial resources for steel decarbonization processes, he said.
“We will have plenty of space for intraregional trade if we copy what the US and EU did,” Lucchesi said. Intraregional trade in North America, Asia and the EU represents around 70% of total trade in those regions, while in Latin America this accounts for just 14%, he said.
“Latin America needs to shake off its stray dog complex: it’s got to stop playing a supporting role,” he said.
Alacero president Jorge Luiz Riveiro de Oliveira, also CEO of ArcelorMittal LatAm Flat Products, said Latin America’s steel sector, which produced 58 million metric tons of steel in 2023, is this year in a “very delicate” situation, flooded by an “aggressive” advance of imports into domestic markets due to global steel overcapacity, a problem as yet unresolved.
This has been exacerbated “by China pushing its steel prices down more than 20%,” and geopolitical instability, which is putting pressure on costs, he added.
“Latin America is, however, growing, and it is important for Latin American countries to act together at this time. We wish to defend the principles of competitive equality with imports, protection of our industries, reindustrialization, sustainability ….and we need to be united to defend our cause,” de Oliveira said.
Martin Berardi, president of Argentina’s Steel Chamber, a producers’ group, and CEO of major producer Ternium, noted a “marked move towards regionalization”, propped up by the trends towards offshoring and nearshoring partnerships.
“This will reorder investments in the industry,” Berardi said.
Techint Group CEO Paolo Rocca pointed out that Mexico is by far the biggest Latin American beneficiary of offshoring partnerships, due to its geographical proximity to the US.
Andres Malamud, social sciences researcher at Lisbon University, noted that the world is seeing a fragmented regionalization which looks more like “segmented globalization.”
Latin America, he said, is becoming increasingly dependent on trade with China - which has led to “reprimarization” of exports from Brazil - and though the region has the resources to create a regional steel market, statistics show that “intraregional trade volumes are less and less.”
Rather than reshoring, nearshoring or friendshoring trade relationships, Latin America has opportunities in “power sharing,” Lucchesi said, referring to the region’s lead in renewable energy generation, which could give it an edge in steel industry decarbonization and attract industrial investments to the region. Alacero notes that Latin American steelmakers’ carbon emissions are lower than global industry averages.
“Latin America also needs to advance in its trade accords,” Lucchesi said, adding he is confident that Latin America’s southern cone common market Mercosur will strike a trade accord with the EU by December after more than 30 years of negotiations and that the region has the ability to strike "mature cooperation" on a decarbonization agenda with China.
