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Slow recovery of steel in the first months of 2023

Slow recovery of steel in the first months of 2023

The Latin American Steel Association (Alacero) revealed that the production of crude steel in February 2023 was 4.5 Mt, 10.8% lower than that of the previous month, while that of rolled steel was 4.8 Mt, 1.6% below the month of January . In the year-on-year comparison, crude steel production in February 2023 was 6.6% lower than in February 2022, while that of rolled steel was 12.1% higher.

On the other hand, the consumption of rolled products was 19% higher in January 2023 (6.2 Mt) compared to December 2022. Compared to January 2022, it was 8.4% higher.

At the beginning of the year, the main steel-demanding sectors showed a mixed behavior in their level of activity: some sharpened the negative trend, such as construction, and others showed tepid signs of recovery, such as industrial production and manufacturing.

Sector thermometer:

  • The worst performance came from the construction sector. After moderating the rate of contraction in the last months of 2022, activity fell more strongly at the beginning of 2023. Thus, after falling by 0.8% year-on-year on average in November/December 2022, it fell by 2.2% year-on-year one year in January 2023.

  • By contrast, industrial production was the sector that performed best. Even after registering a slight fall in December 2022, activity grew by 5.3% per year in January 2023, after falling by 0.3% per year in the last month of 2022.

  • Manufacturing performance was good in Argentina and Peru (+6.3% and +1.1% YoY, in each case), countries that had registered year-on-year falls at the end of 2022 (-2.7% and -4, 6%, respectively). For its part, Mexico recorded acceleration in the first month of the year (from 2.7% a/a in December-22 to 4.8% a/a in January 2023).

  • Within the industry, heterogeneities are also observed. Despite the traction of Argentina and Mexico (which registered annual increases of 22.9% and 10.3%, respectively), automotive production advanced in February 2023 at a slightly lower rate than the previous month (5.5% y/y vs. 6.0% y/y).

  • Machinery production continued to improve in January 2023, when it grew 8.7% annually, led by Mexico and Chile (with expansions of 15.0% and 12.5% ​​YoY, respectively), while the manufacture of household appliances rebounded after 17 months in negative territory, posting a year-on-year increase of 1.7%. In the latter case, the boost in Argentina (19.2% YoY) was fundamental, as well as a more moderate contraction in Chile, Peru and Mexico (-4.4%, -9.0% and -12.4 %, of -35.2%, -23.6% and -17.3%, respectively).

Production, marketing and consumption of steel

“The international situation demands extreme attention from our local regional industry. With China’s steel output declining in the face of strong internal and external pressure to reduce carbon footprints, there is now room for emerging nations to redirect their supply of finished products. Thus, a good opportunity is generated for new businesses and for the intensification of intra-regional trade between Latin American countries,” he points out. Alexander Wagnerexecutive director of Alacero.

“Another focus of attention is the imminent approval by the countries of the European Union of the final version of the Coal Border Adjustment Mechanism (CBAM), which aims to control the entry into the EU of certain goods imported from non-EU countries that have with regulations on carbon emissions considered less strict by the European Commission, also opening an alert for Latin American countries that have trade negotiations with these countries”, he adds.

The Néstor Kirchner Pipeline, promoter of steel

One of the impulses for steel consumption in Argentina was the construction in record time of the Néstor Kirchner gas pipeline, a key work for the energy integration of the region. The trunk route of the gas pipeline has an extension of 573 kilometers between Tratayén, in the province of Neuquén, and Salliqueló, in Buenos Aires, crossing Río Negro and La Pampa with a 36-inch pipe.

During the construction process, More than 47,700 12-meter-long steel pipes were used, whose total weight is 300,000 tons, “equivalent to 4,285 Buenos Aires obelisks,” Energía Argentina graphed. It was also noted that an average of five kilometers of pipes were welded per day on the three work fronts and “for the first time, automatic welders were used in our country, the most advanced technology worldwide that reduces work times.”

Crude Steel Production:

  • February 2023 production was 6.6% (4.5 Mt) lower than the previous February (4.8 Mt in 2022) and 10.8% lower than the previous month (5.0 Mt in January). In the first 2 months of 2023 it was 4.6% below the same period of the previous year. With 9.6 Mt total;

Laminate Production:

  • The production of February 2023 was 12.1% (4.7 Mt) higher than that of the previous February (4.2 Mt in 2022) and 1.6% lower than that of the previous month (4.8 Mt in January). In the first 2 months of 2023 it was 10.8% above the same period of the previous year. With 9.6 Mt total;

Laminate trade:

  • January imports totaled 1.9 Mt (+92 Mt in one month), 13.3% less than the previous January (2.2 Mt) and 4.9% more than the previous month (1.8 Mt imported in December 2022);

  • Exports, for their part, registered 607 Mt (-138 Mt in one month), 34.7% less than the previous January (930 Mt in 2022) and 18.5% less than the previous month (744 Mt exported in December 2022);

Laminate Consumption:

  • In January 2023, 6.16 Mt were consumed (+983 Mt in one month), a figure that represents an increase of 8.4% compared to the previous January (5.6 Mt in 2022) and 19.0% higher than the previous month ( 5.1 Mt tons in December).

The final numbers of 2022 for LATAM

In 2022, the region’s apparent consumption, which in 2021 was 75.1 Mt (+25.7%), registered an expected drop of 8.7%, closing at 68.5 Mt. This represents 107 kg/per capita, equal to the average for the period 2015-2019.

For its part, 2022 closed with a crude steel production in LATAM of 62 Mt (-4.1% vs. 2021) and 54 Mt of finished steel (-3.4% vs. 2021).

Source: Ambito

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