Latin America: difficult times today and lights in the medium-run
Alacero informed the Board of Directors about the regional economy and its impact on the steel industry. While in 2011, the regional GDP had grown 4%, in 2013 it expanded just 2.2%. Even when 2013 was a difficult year for several Latin American economies, a first outlook for 2014 displays a slightly higher growth rate of 2.3%. Prospects are more encouraging for 2015, when regional growth should consolidate, favored by the recovery of the central economies.
 
Industrial production, a more crucial indicator of the rhythm of industrialization, grew just 0.5% in 2013. This figure that shows the virtual stagnation of the activity turns even more dramatic as it follows a previous drop of -0.3% in 2012. Expectations for 2014 are more positive as industrial production should grow 1.9%. However, these are still insuffi9cient to be considered signs of a real return of the region to the path of industrialization.
 
Scenarios for the next 2 years differ from country to country. In some cases, they are less conducive and marked by inflation and possible stagflation, commodities’ prices deterioration, fiscal restraint and reduction of private investment. In other cases, they look more encouraging and include infrastructure investments and the recovery of the steel demanding sectors.
 
In line with the GDP and the industry, the main steel demanding sectors showed moderate expansion in 2013. Construction (47% of the regional steel consumption) grew just 1.4%. Automotive expanded 7.1%. Metallic products dropped 1.8%. In 2014 and 2015, these scenarios will improve because of the expansion of metallic goods production and some growth in automotive and construction.
 
Following the previous indicators, in 2013 apparent steel use was not able to grow vs. 2012 and showed dissimilar results by country. Brazil grew 4.8%; Argentina, 2.8%; Mexico dropped -8%; Chile, -11.9%; and Venezuela, -5.3%. Colombia expanded its steel use just 1.1% and Peru, 7%. However, the current year looks better, with a growth rate of 4.5% that would continue to increase by 3.% in 2015.
 
Ensure fair trade in Latin America
One of the topics of the agenda of the steel value chain is the marked growth of Latin America as preferred destination for Chinese exports of steel and steel-containing goods that many times arrive under unfair trade conditions; a concern that is becoming extensive to Turkish exports to the region, too.
 
Latin America represents less than 5% of the global finished steel consumption (about 67 million annual tons). However, in 2013 it accounted for 9% of Turkey’s total exports and 10% of Chinese ones. This describes how attractive the region is for both countries.
 
For several years, Alacero has been monitoring trade flows of raw materials, finished steel and indirect trade of steel between Latin America and China. Recently, Alacero added a new Yearbook about trade flows with Turkey that was introduced to the Board of Directors.
 
This report shows that in 2013, Turkey exported 1.26 million tons of steel to the region, most of them being long products for construction. This country supplied 20% of the regional imports of long products from abroad.
 
The case of China is even more serious. During the last 6 years, between 2008 and 2013, Chinese exports to the world grew just 5.2%, from 51.4 million tons to 54.1 million tons. However, in the same period, Chinese finished steel arriving to Latin American more than doubled: increasing from 2.6 million tons in 2008 to 5.7 million tons in 2013.
 
The Board of Directors urged the Association to continue to follow-up on the antidumping measures and commercial safeguards in the region, to collaborate with its associates providing information about the actions being taken by country, and to cooperate to reinforce the message to governments to confront unfair trade.
 
Martin Berardi, president of Alacero, was very clear about the role of the Association: “Alacero should work even harder to generate awareness about the harm that the arrival of products under subsidies and unfair conditions — especially from China — cause to Latin America in terms of job losses, decreases in fiscal income, reduced investment and economic sustainability.”
 
The environmental factor
Another of the discussed topics was the relation between environmental regulation and international trade, and its consequences on Latin America and the steel industry. Latin America has a very limited weight in the environmental problems of the world. The regional steel industry causes just 0.23% of global emissions of CO2. Still, it makes efforts to measure and minimize its impact throughout all its productive processes. Its main companies participate actively in the World Steel Association’s “Climate Action Program” by reporting their emissions. They also develop internal practices for environmental care.
 
However, the Latin American steel industry should operate in a global context where environmental regulations and requirements are neither clear nor uniform enough when they refer to the exchange of goods among countries. There are legal loopholes and a lack of unequivocal criteria.
 
Confronted with this situation, Alacero supports the principles promoted by the Latin American countries that defend the principles of equity, with differentiated responsibilities that compensate the historic environmental debt of developed countries. Also, they call for financial and technological support to face the climate change problems.
 
Through its Board, Alacero has proposed to adopt common criteria to be included in national and supranational regulations, among which are:
1.     Assessment of similarities between domestic and imported products, following the precept of non-discrimination of the WTO;
2.     Support for environmental measures that
a.     Do not restrict or impede trade,
b.     Ensure environmental legitimacy and not merely pursue revenue goals, and
c.     Are based on scientific evidence.
Alacero announced that these topics will be part of the Congress Alacero-55 that will take place in Mexico City 9–11 November 2014. These subjects will be addressed by a number of world-class specialists such as: Emilio Lozoya (general director of PEMEX), Edwin Basson (general director of worldsteel), and Aryam Vazquez (from Oxford Economics). Also, this year the Congress will include Alacero-Next, a panel focused on innovation and technology, including Harold Sirkin (senior partner at BCG and author of the bestseller “Globality”,) and a debate with 11 of the most important CEOs of the Latin American steel industry that will share their vision on the future of the regional steel industry.