Leaders of Latin American steelmakers say they expect growth opportunities for the region for 2018 amid mixed results in many countries this year.
Martin Berardi, CEO of Argentina's Ternium Siderar, said that country faced an important change in regards of its political landscape in the past years, which brought confidence for investors and growth to the industrial sector.
About 45%-50% of all steel produced in Argentina is destined for the construction sector and the importance of reactivating this activity is crucial for the local steel industry, Berardi said, speaking along with other executives Wednesday as the Alacero-58 Congress in Cancun, Mexico, came to a close.
"We've been seen public works as the main driver, but investments by the private sector is also growing," he said. "Agro-business continues to be the most important driver for flat steel, with a 42% year-on-year increase in activity during the first half of the year, followed by the energy sector, with a 23% growth, and construction, in which cement consumption shows a 16% increase."
But Berardi pointed out that white goods and automotive industries continue to struggle. "The automotive sector remains linked to Brazil's situation, as half of the production is directed to the neighbor country," he said. "For 2018, I believe Brazil will show signs of recovery; I'm very positive regarding Brazil as their situation reflects largely in Argentina's industry."
Benjamin Baptista, CEO at ArcelorMittal Brazil, said "the country's situation is not good, reflecting the past two years dipped in political and economic slump -- which was the biggest crisis Brazil ever passed through," he said. "In the past two years, for example, we returned to industrial levels we had 10 years ago," he added.
According to Baptista, flat steel consumption in Brazil relies on the automotive activity, while long steel is based on the construction sector.
"And most of the main steel-consuming companies were involved in the corruption investigation Lava Jato, which affected investments, operations, and steel consumption," he said.
But for 2018, consumption of steel products in Brazil is expected to increase 7% for both longs and flats steel," Baptista said. "The perspective for Brazil during next year is positive," he said.
Colombia's steel industry also sees room for increases in 2018 after a not-so-great 2017, the president of steelmaker Acerias Paz del Rio, Vicente Noero, said.
"Colombia had a very clear deterioration of its industries during 2017," Noero said. "The point is that high interest taxes summed up with low confidence level from the market made housing purchases to decrease significantly during 2017, and that reflected on the construction sector, thus steel demand."
In Noero's opinion, he said, the government is trying to boost housing sales by decreasing taxes and interests, but demand also was affected and fell due to the low development of the general economy in the country, reflected by the tax reform, political corruption crisis and lack of investments.
"For 2017 is estimated a decrease of 3% in the long steel consumption," Noero said. "But in 2018 the outlook is positive, attached to investments in the [Fourth Generation] project."
The Fourth-Generation infrastructure effort is a $16 billion project expected to begin in 2016 and last eight years. Its top initiatives include building and improving over 8,000 km of roads around Colombia, in addition to construction at airports, ports and rails.
Peru's Aceros Arequipa Executive Chairman Ricardo Cilloniz said Peru faced deceleration of its domestic demand during 2017, while the economy lost dynamism, especially in the construction and industry.
"Peru had several delays in construction projects expected for 2017 attached to the lack of private investments and corruption investigation," he said.
According to Cilloniz, Peru faced the effects of the El Nino phenomenon in the first quarter of the year, which affected logistics for several months and also impacted demand for steel.
For 2018, however, private investments are expected to resume increases after four consecutive years of falls, he said.
"Public investments and mining exports are the drivers of the reactivation for next year," Cilloniz said. "Perspective for next year is for higher exports in iron ore, with higher prices, favorable exchange rate, and larger investments from the state."
For all countries, however, the China factor continues to be a concern.
"The region must unite as one as to fight against the unfair practices of China," Baptista said. "Integration is important for Latin America, as everyone sees China as a Nemesis for the steel chain -- not only finished steel products, but manufactured products."
Berardi said when a nation's economy is opened, governments, the domestic steel industry, and local finished goods manufacturers, need to be on guard against unlimited imports.
"Latin American governments could boost trade within the region to avoid imports from other regions, as China or Turkey," he said. "The Mercosur trade agreement could be extended for the entire region."
