Latin American steel advocates warn on cheap import flood 

Subsidies and overcapacity

Global overcapacity threatens small and mid-sized LATAM steel producers, the report warned. By 2027, the projected amount of steel overcapacity is expected to reach 721 million metric tons (mt).  

In the next two years, it’s projected that China will add 47.3 million mt, India will add 30.4 million mt, and ASEAN will contribute 14.8 million mt.

The report highlights the role that direct and indirect government subsidies play in amping up China and ASEAN steel production: Through subsidized loans, land grants, state-directed mergers and acquisitions, below-market-priced raw materials and utilities, and tax relief for recruiting employees, the Chinese government supports market-distorting steel production. China’s domestic market demand doesn’t match its production levels, the report said.

Since 2021, Chinese investments in ASEAN steelmaking created ~10 million mt of steel capacity. Ninety-six percent of the capacity added to the ASEAN market comes from subsidies. Thailand added 2 million mt capacity, Malaysia’s capacity has also increased 2 million mt, and Indonesia’s capacity tripled to 6 million mt.

Protecting LATAM’s steel producers

Steel advocates say that the region must swiftly implement efforts to protect itself. The recommendation is that the countries in the region align strategically to thwart trade threats from China and ASEAN nations. The report unequivocally calls for implementing industrial policies across the region, promoting regional value chains, and strengthening its trade defense tools.  

Finished and semi-finished steel imports to LATAM from China swelled by 233% from 2010 to 2024, the report stated. And in 2024, 39% of the steel consumed in LATAM was imported. The region’s manufacturing GDP declined by four percentage points over 25 years, with Chile, Brazil, and Argentina most affected.