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Latin American Steel Mills to Defend Their Territory

Written by Sandy Williams

May 22, 2015

Canacero, the Mexican Iron and Steel Industry Chamber, is urging Latin American countries to take action against the flood of steel imports and derivatives from China.

Latin America is the second largest international market for Chinese steel products, said Alonso Ancira Elizondo, president of Canacero. In 2014 shipments of rolled steel from China exceeded nine million tons. In five years, China’s market share of the Latin American steel industry rose from 6 percent to 13 percent.

Imported steel from China has forced domestic producers to shutdown operations and has hurt profitability.

“Against this background, product and protectionist measures taken by other countries, including some of our trading partners such as the United States, the trade deficit of the steel sector increased to 6.6 million tonnes,” said Ancira. He emphasized, “Definitely, the main problem facing right now the steel industry is unfair competition.”

Mexico is open to free trade and has had almost no tariffs since 2012 which has encouraged the growth of imports from the rest of the world. In four years, steel imports grew 84 percent while Mexican producers averaged a capacity utilization rate of less than 65 percent. Unfair trade has stymied investment efforts by Mexican steel producers to generate new products to compete with foreign imports.

Ancira said that the past two administrations did almost nothing to address the situation. The current government he said has a different approach and has tried to ensure fair competition through sanctions and investigation of illegal practices. “There has been progress, but there remains “black holes” which it seeking to control,” said Ancira.

Canacero recently accused Chinese of subsidizing exports of cold rolled steel to Mexico resulting in artificially low pricing. Last June, prompted by OCTG supplier Tenaris, Mexico slapped anti-dumping tariffs on seamless stainless steel pipe used in oil and gas pipelines.

Sandy Williams

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