Alacero voices concern over China

With Latin America the second largest international market for Chinese steel products – accounting for 10% of shipments – and Chinese steel exports to the region last year over 9Mt, it’s no wonder that Alacero (the Latin American Steel Association) is concerned about China’s installed overcapacity.

At the recent Steel Committee of the OECD meeting, held 11 and 12 May, Alacero representatives presented the effects of unfairly traded steel in Latin America and it was concluded that there was causality between market-distorting policies and overcapacity and that the slowing of the world economy was fuelling rapid deterioration in markets on the receiving end of dumped steel products.

According to Alacero, China has managed to grow its share of Latin American steel consumption from 6% to 13% in just five years and this has displaced local producers, generated technical stoppages and led to production line and plant closures.

The Chinese government, claims Alacero, has no plans to reduce its installed overcapacity of 450Mt (which is six times Latin America’s annual output) and Alacero, alongside national steel associations, have focused strongly on alerting the industry to the problems posed by the Chinese position.

At the OECD meeting, Alacero discussed Latin America’s low growth forecasts, arguing that the situation will hamper its steel market recovery.

“Latin American companies are presenting anti-dumping cases to local governments, using the instruments made available to them by the World Trade Organisation”, the aim being to secure a level playing field.

Alacero claims that while 60% of regional steel-related anti-dumping proceedings currently in force or in process in the region are against China, they are proving to be largely ineffective.

The problem, claims Alacero, extends to the entire steel value chain and there is increasing concern about the growing tonnage of Chinese products with a high steel content (worth US$82 billion in 2014).

In a message to all Latin American governments, Alacero wants rapid action to level the playing field, particularly in relation to China, and it wants regional governments to be aware of the risks facing the steel and manufacturing value chains in the area.

Martin Berardi, president of Alacero, said, “The tools and rules provided by the WTO ensure market competitiveness and governments should implement them promptly.”

The Latin American steel industry favours regional and intra-regional integration and subsequent trade liberalisation ‘as long as unfair competitive distortions’ are avoided, he added.