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Steel News May 22, 2018 10:30:16 AM

Massive Structural Changes to Impact LatAm Steel Industry

Paul Ploumis
ScrapMonster Author
The unfair trade in steel due to dumping and subsidies continues to pose big threat to regional steel trade.

Massive Structural Changes to Impact LatAm Steel Industry

SEATTLE (Scrap Monster): The Latin American Steel Association (Alacero) states that the world steel industry is currently undergoing massive structural changes, the effects of which can influence Latin American steel producers, following the huge upturn witnessed in 2017. The regional steel market faces high-risk scenario, mainly on the back of Chinese overcapacity woes and the series of protectionist and countermeasures by several countries across the globe. The steel trade body called for collective action by regional governments to ensure fair trade and level playing field in the LatAm regional steel market.

As per the Organization for Economic Co-operation and Development (OECD) estimates, global steel overcapacity currently stands at nearly 600 million tons, led by China. Till date, there has not been a solution to this problem. On the other hand, announcements of new capacities tend to aggravate the issue even further.

ALSO READ: Latin American Imports of Chinese Steel Collapsed 50% in January

The unfair trade in steel due to dumping and subsidies continues to pose big threat to regional steel trade. The trade defense mechanisms implemented by the World Trade Organization (WTO) has not yielded positive results so far. This has led to evolution of various trade barriers, which tend to distort global steel trade. These barriers will produce trade deviation, which in turn will affect the Latin American steel market, Alacero noted.

According to Alacero, a coordinated action by the governments and industry is required to address the problems faced by the global and regional steel industry. Further strengthening of WTO trade defence instruments and an effective customs monitoring system will help to minimize trade diversion. Further, the governments of Latin America must work together to present a joint defense in international forums where industry issues are discussed. Alacero also recommends developing a permanent system to monitor industry situation in the main countries.

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