This situation threatens the jobs and activities of regional producers
Latin America’s steel industry is facing a crisis due to unfair trade practices by China, which has flooded the market with cheap steel. Diálogo Americas writes about it.
This situation threatens jobs and livelihoods of regional producers.
The slowdown in China’s real estate and construction market has led to a decline in domestic steel demand, forcing the country’s steelmakers to depend on other markets to fill the gap, Henry Zimer, a research fellow at the American Program at the Center for Strategic and International Studies (CSIS), told the publication. And as the US market looks increasingly unfavorable for Chinese steelmakers, they are now turning their attention to Latin America.
China’s strategy of selling its products at below-market prices has led to a dumping situation that is seriously affecting the region.
Mexico, Chile and Brazil have significantly increased tariffs on Chinese steel imports to protect domestic companies, and other countries in the region are likely to follow suit.
Earlier, the Latin American Steel Association (Alacero) pointed out that steel products from China are “drowning” the local steel industry, which has forced several companies in the region to freeze or suspend their operations, and this situation creates preconditions for a process of deindustrialization in the region.
In addition, experts point out that the quality and environmental standards of Chinese steel production are not taken into account by buyers in Latin America, who are mainly focused on lower prices to the detriment of the local industry.
The imposition of tariffs on Chinese steel also highlights the potential for trade tensions between Latin American countries and China, with the possibility of retaliation by the latter.
According to Ziemer, China produces more steel than the next nine producing countries combined, which gives it a powerful tool to influence prices and local economies. However, the fact that the latest round of safeguard measures affected countries such as Chile and Mexico may provide the US with an opportunity to coordinate efforts with Latin American countries to mitigate unfair Chinese trade practices and protect national industries.
As reported earlier, the Indian ministries of steel and commerce are engaged in a dialogue on the growth of imports of steel products, especially Chinese ones, amid persistent calls for higher tariffs from steel companies. China has remained the largest exporter of steel to the country in recent months.
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