During the event “Unfair trade and its impact on Latin America”, organized by the Latin American Steel Association (Alacero) and the National Chamber of the Iron and Steel Industry of Mexico (Canacero), leading figures from the sector warned about the critical state of the steel industry in the region. The meeting took place on Wednesday, May 7, in Monterrey, Mexico, and was attended by international authorities and experts.
Anthony De Carvalho, head of the steel unit of the Organization for Economic Cooperation and Development (OECD-OECD), pointed out that the steel industry in Latin America is facing a critical situation due to the growing global overcapacity and market distortions generated by subsidies from economies such as China and other Southeast Asian countries.
According to De Carvalho, “the root cause of this crisis is market distortion. In China, subsidies are 10 times higher than in OECD member countries, and 5 times higher than in some non-member countries”. He also warned that global overcapacity is projected to reach 721 million tons by 2027, which could severely affect small and medium-sized industries worldwide. Despite this scenario, plans to increase installed capacity continue, particularly in China, India and Southeast Asia.
During his presentation, Luciano Giua, economist and policy analyst at the OECD, explained that the problem lies not only in subsidies, but also in their variety and scope. In China, he pointed out, companies with deficit balance sheets maintain unrestricted access to credit, in addition to benefiting from direct subsidies such as state subsidies, tax exemptions and subsidized loans, and indirect subsidies such as energy, land or raw materials at below-market prices, and less demanding environmental regulations.
Another highlight was the increase in Chinese steel exports. With domestic demand declining, China – which produces 53% of the world’s steel – exported more than 110 million tons of finished and semi-finished steel in 2024, of which 14.2 million tons were destined for Latin America. This represents an increase of 129% between 2019 and 2024, reaching historic levels and generating pressure on the local industry.
The concern also extends to manufactures produced with Chinese steel, which are entering Latin American markets on a large scale. Between 2008 and 2024, indirect imports from China in sectors such as automotive and household appliances grew by 338%, and by 137% between 2015 and 2024 alone, exceeding 4.9 million tons.
“Today the challenge is not limited to steel products. Manufactures made with Chinese steel are also impacting the entire value chain, especially small and medium-sized companies,” emphasized De Carvalho.
Ezequiel Tavernelli, Executive Director of Alacero, said that the region is going through a worrying process of deindustrialization. “In the last 25 years, Latin America has lost an average of 4 percentage points of industrial GDP, and our manufacturing exports have lost 5 percentage points as a share of total exports. We need to act quickly and in a coordinated manner to protect the 1.4 million jobs that depend on the steel value chain”.
Finally, De Carvalho concluded: “Industries operating under market rules are facing unequal competition. The current crisis reflects an existential threat to the steel industry and requires urgent action to preserve its viability and sustainability”.