[Dialogo Americas] The unprecedented influx of cheap steel from China throughout 2024 has led Latin American countries to take a turn toward protectionism. One after another, countries of the region have imposed tariffs on Chinese steel imports in an attempt to protect their domestic steel industries from the cheap competition. China’s dumping strategy of steel has fostered a crisis within the Latin American steel industry, leading to the closure of major companies and jeopardizing hundreds of thousands of jobs in the region.
The situation is far from over. Chinese steelmakers are expected to keep pushing out shipments in 2025, likely worsening the already vulnerable position of the Latin American steel industry, Reuters reported. Mexico, Brazil, Chile, and more recently Colombia have pushed back, hiking duties on steel products from China.
Beijing’s attempts to grow its influence in Latin America has led to growing anger, German news agency DW reported. Among the latest casualties, and perhaps the most emblematic of China’s economic clout was Chile’s largest steel plant Huachipato, which ended 74 years of operations by shutting down its main furnace in September, marking the end of an era for the region’s steel industry due to intense and unfair competition from China.
For the port city of Talcahuano and its 160,000 inhabitants, part of Chile’s Biobío region, the closure of Huachipato meant the loss of its economic engine. Some 2,700 workers were directly affected, while an additional 20,000 people indirectly linked to the company were affected, nongovernmental organization Fundación Andrés Bello indicated. Huachipato’s closure also has national repercussions, as local unions have estimated that more than half of the workers who lost their jobs are over 50 years old, complicating their chances of reemployment.
The steel company’s shutdown also affected more than 1,000 small and medium-sized local companies, potentially increasing unemployment in the region to 11 percent, Fundación Andrés Bello added. The closure of the Huachipato steel plant will have an impact on the regional Gross Domestic Product (GDP) of 3 percent in an area that contributes almost 6 percent to Chile’s GDP, according to estimates of Chile’s Catholic University of the Most Holy Conception.
“I worked in Huachipato, my father worked in Huachipato, my wife was also a Huachipato worker, and we had a good standard of living,” Fernando Orellana, 62, who started working in the company’s cleaning department at the age of 25 and was promoted to head of the division, told AFP on September 13.
Roberto Hernández, another steel worker who lost his job, described the situation as “terrible.” “Where am I going to find work at this age?” the 54-year-old assembly worker asked AFP.
In Latin America, steel generates 1.4 million direct and indirect jobs and is fundamental in different strategic economic sectors, the Latin American Steel Association (Alacero) said in a November 1 statement.
Brazil, which is the world’s ninth largest producer and the largest in Latin America, with 10 large mills, is already showing signs of being affected by Chinese steel. In 2023, imports from China increased by 50 percent and production fell by 6.5 percent, according to the Brazil Steel Institute. In late 2023, Usiminas shut down a furnace due to the volume of imports from China. Gerdau, one of the country’s largest steelmakers, laid off 700 workers by April 2024 due to the “challenging scenario facing the Brazilian market in the face of the predatory conditions of Chinese steel imports,” the company told AFP on April 18.
Latin American countries are trying to counteract. In October, Brazil imposed new tariffs on imports from China up to 25 percent in a bid to combat dumping and “protect domestic industry from harm caused by this practice,” officials said. The tariffs are the same as those Mexico imposed on 205 types of steel products. In Mexico, steel accounts for 1.4 percent of GDP and generates 700,000 jobs.
“The drop in production, in a context of falling consumption and rising imports, reflects the need for the region to look for strategies to strengthen its local industry and reduce vulnerability to the international market,” Ezequiel Tavernelli, Alacero executive director, told Diálogo in a statement.
Alacero explains that the increase in Chinese steel imports into Latin America continues to threaten the regional industry, given that the products arrive in the region at below-market prices, coming from a country that provides financial support to its steel industry outside of World Trade Organization (WTO) regulations, and many of these subsidies violate WTO agreements.
“Our region has one of the best environmental performances in steel production, with emissions of 1.55 tons of CO2 per ton of crude steel,” José Fonrouge, senior global director of Sustainability at Brazilian steelmaker Ternium and chairman of Alacero’s Environmental Policy Committee, told Diálogo. This rate is well below the world average of 1.91 tons of CO2 per ton of crude steel and is about 25 percent lower than the emissions generated in China, he added.
As of November 2024, Alacero had filed 373 dumping complaints with the WTO against China.
[Wiew source]
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