China's dominance in global steel production is putting pressure on the sector in Latin America, which has just come through a difficult year due to the economic fallout from the pandemic and the impact of the war in Ukraine, according to the Latin American Steel Association (Alacero).
A study by the organization states that the Latin American steel sector faces a slow recovery in 2023 due to latent uncertainties in international trade and internal policies for industrial recovery implemented by China in steel production.
Meanwhile, the executive director of the Dominican Steel Association (ADOACERO), Marcelo Salazar, explained that China is the world's largest steel producer, representing 54% of the total steel produced in 2022, which was 1.878 billion metric tons.
“The decline in steel consumption in China, driven by the shrinking construction sector and a domestic oversupply, as well as high interest rates, still-rising inflation, and a slow global economy due to the energy crisis and the conflict in Ukraine, will affect steel producers in the Latin American region,” Salazar said.
According to studies conducted by Alacero, the global steel market is expected to expand by an average of 2.5% annually until 2028, reaching $1.12 billion.
This growth is occurring against a backdrop of slower global growth and unfavorable financial conditions. Salazar noted that China's economic situation and the Russian-Ukrainian conflict are having a significant impact on the Latin American economy.
China is a major buyer of raw materials from many countries in the region, so any change in its currency can have a domino effect on the Latin American market.
It is important to highlight that, in addition to its market impact, steel production in China also has a significant environmental impact. China emits 2.24 tons of CO2 per ton of crude steel produced, making it one of the world's largest emitters in this sector. Therefore, Adoacero also supports the production of construction materials that demonstrate a commitment to environmental responsibility.
In comparison, Latin America has the lowest emissions at 1.60 tons/per ton of steel produced, while the world average is 1.91.
Source: Listín Diario.
