The demand for steel in Latin America could fall, they estimate, as the industry faces regional inflationary pressures, price increases due to the Russia-Ukraine conflict and political instability., according to the industry report. The regional steel sector recovered in 2021 following coronavirus-related restrictions in 2020, surpassing previous production levels.
In this way, the report indicated the Latin American region “faces a complex scenario, marked by economic slowdown, sustained inflationary pressures and volatility.” in 2021grew 6.7% but failed to recover pre-pandemic levels. The rebound not only occurred in Argentina, but was also seen in a context of significant asymmetries between the countries, some of them such as Chile, Paraguay, Colombia, Peru and Brazil, which returned to their 2019 GDP levels.
What is the forecast for 2022
According to the Alacero report, a slowdown is expected for 2022, since Latin America will grow only a quarter of what it advanced in 2021. The Russia-Ukraine conflict negatively impacted a lot of items, especially commodity prices.
So far in 2022, the data indicates an increase of 23.6% in soybeans, 34% in corn, 138% in wheat and 99% in natural gas from Europe. This also affects steel, an essential input for the industry.
In volumes, the production of the steel demanding sectors is highly concentrated in Brazil and Mexico, of 83 thousand tons of steel in 2021, Brazil used about 45 thousand and Mexico 24 thousand.
The expected drop in demand in 2022, around 2%is due to “a cocktail of three major factors at the same time,” the president of Alacero told Reuters, Alexander Wagner. The construction sector in Latin America contracted 3% in the first quarter, while the automotive sector fell 1.2% year-on-year from February to April, according to Alacero.
In Mexico alone, the construction sector contracted 0.2% year-on-year in May, while its mining sector contracted 1.7%, according to the country’s statistics agency. Demand could recover by 2023, growing about 4% compared to this year.
Projections in Argentina
In Argentina, the macro scenario will be largely determined by the ability to sustain the agreement with the IMF. The demand for steel in the country grew 1.3% in construction, 38% in automotive and 12% in mechanics. For 2022, the country foresees a general slowdown in the sectors demanding steel.
In our country, year-on-year inflation totaled 60.7%, which is why the Government is seeking to speed up the Néstor Kirchner gas pipeline infrastructure project, which could give Latin America and the steel industry a major boost. “This places us in a privileged position, and we have large steel and engineering companies with the capacity to carry out the titanic task of building oil pipelines, generating direct and indirect jobs,” said Wagner.
Source: Ambito
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