Latin American Steel Industry Numbers Down on Mexico Issues – Alacero
Latin American steel association Alacero announced that the performance of the Latin American steel industry has been undermined by external and internal factors, from commercial tensions to the activity of key nations in the region. One of the factors that most influences internally the results, is the difficulty of Mexico, the second largest economy in Latin America, to maintain its commercial volume and the dependence on fluctuations in trade agreements. It said As discussed in the previous months, Mexico has contributed negatively to the losses in both trande and steel production in relation to other countries in LA, and its participation in the cumulative deficit of consumption of crude and rolled steel is even older. As a reflect of a market loss, the country represents more than half of the deficit in consumption of crude and rolled steel in Latin America.”
Region's steel market during January-May 2019 presented a 2% drop in the consumption of rolled steel compared to January-May 2018. Regional production of crude and rolled steel until June fell 4% and 7%, respectively, versus January-June 2018. However, although there is an accumulated deficit of 1.8 million tonnes in the rolled steel production compared to the first half of 2018, the month of June is highlighted as the least productive since February 2019. Therefore, the expectations of apparent consumption by the end of this year, which had been estimated around 70 million tonnes last March, will not exceed 68 million tonnes in the most positive scenario.
The region increased its imports 1.2% between April and May 2019, identifying 0.1% increase compared to January-May 2018. The share of imports in regional consumption remained at 37% for the third consecutive month, as opposed to 36% in January-May 2018. This confirms the dependence of consumption on imported rolled steel, due to falls in cumulative production and apparent consumption. The deficit recorded in January-May 2019 was 6.0 million tonnes, with 232 thousand tonnes more than January-May of the previous year (5.8 million tonnes).
Crude steel - Latin America had a 5 million tonnes crude steel production in June, 8% lower than that recorded in the same period of 2018 (5.5 million tonnes). Considering the accumulated in 2019, there were produced 31.3, 4% less than January-June 2018 (27.1 million tonnes). A smaller deficit compared to the accumulated of the first five months, which showed a 5% drop. But the value identified in June was 4% lower than the January-May average. In the year, Brazil is the main producer with 17.2 million tonnes, followed by Mexico with 9.5 million tonnes, representing respectively 55% and 30% of the annual regional total. Highlighting that the accumulated deficit in the production of crude steel in Mexico was 946 thousand tonnes (-9%), making up 73% of the regional deficit (1.3 million tonnes). Of the 4% fall recorded for Latin America, 3% is composed of Mexican casualties.
Rolled steel - The region produced 4.1 million tonnes of rolled steel in June, 8% less than the same period of 2018 (4.5 million tonnes). In the year there was 25.6 million tonnes, representing a 7% drop compared to the first 6 months of 2018 (27.4 million tonnes). To remember, the comparative accumulated in the previous report pointed to the 8% drop. The main producers in the year are Brazil with 11.6 million tonnes (45% of the Latin American total) and Mexico with 8.7 million tonnes (34% of the Latin American total). Of the 1.8 million tonnes accumulated deficit, 68% are represented by the Mexican results (1.3 million tonnes). Of the 7% regional decline, 5% was driven by Mexican casualties. In the previous report, Mexico's participation in the deficit was 52%.
Imports - 2.07 million tonnes of rolled steel were imported in May, 8% less than May 2018 (2.25 million tonnes). In the accumulated January-May 2019, Latin America imported 10.0 million tonnes of rolled steel, 0.1% more than what was imported in the same period of 2018 (9.98 million tonnes). Of this total, 70% correspond to flat products (7.0 million tonnes), 27% to long products (2.7 million tonnes) and 3% to seamless tubes (283 thousand tonnes). In May, rolled steel imports accounted for 37% of the region's consumption, the same percentage of April 2019, which points to a lack of incentives for the local industry, commercial friction and puts the sources of employment at risk.
Exports - 773 thousand tonnes of rolled steel were exported in May, 7% less than in April 2019 (829 thousand tonnes) and 9% less than May 2018 (848 thousand tonnes). In the accumulated January-May Latin American exports of rolled steel totaled 4.0 million tonnes, 5% less than that recorded in January-May 2018 (4.2 million tonnes). Of this total, 49% correspond to long products (2.0 million tonnes), 40% to flat products (1.6 million tonnes) and 11% to seamless tubes (415 thousand tonnes) - a slope below the 2018 curves , with further falls after the April recovery.
Source : Strategic Research Institute