Alacero reviews growth expectations downwards

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alaceroAlacero-Santiago, Chile. September 12th, 2013. Alacero reviewed the Latin American steel industry economic situation downwards after the weak results observed during the first semester of 2013. This was announced during the last Economic Committee of worldsteel –the association that represents steel producers globally- that met in Seoul, South Korea, last September 11th and 12th.

The result is partially due to a drop of the projected regional GDP for 2013, which now is expected to grow just 2.6% (versus 3.6% projected last April). The outlook for 2014 remains stable (GDP growth projection revised from 3.2% to 2.9%), even though uncertainty levels are high because of the dependency of many Latin American countries on commodities and Chinese demand.

Alacero also highlighted the low industrial activity in the region. After the contraction experienced in 2012, the sector did not to reach a sufficiently strong recovery in 2013 and it is expected to grow just 1.8%. In 2014, it would be possible to see slightly better results, with a growth of about 2.8%. The activity of steel demanding sectors was also revised downwards by 1 pp, because of a weaker than expected first semester and the high volatility that characterizes all sectors of the regional economy. Forecasts for 2014 indicate that growth will be in line with that of current year (3.8% vs 3.5% in 2013).

The weak outlook of the regional economy and the demand sectors necessarily translated into a negative revision of the Latin American steel industry. Currently, steel demand is expected to grow in 2013 just 1.5% (versus 4.3% projected last April) Apparent steel use in Latin America was not able to grow during the first semester of the year when compared
to same period of 2012. Local production continues to be below consumption levels and the gap is being supplied by imports, which is becoming a growing concern for several Latin American countries that witness the negative impact of foreign products arrival on local employment and industrialization.

At a global level, the Committee observed some degree of recovery in consumption during the second semester of 2013, in line with the more stable situation described by the central economies that were hit by the crisis of 2008.

The Economic Committee of worldsteel expects apparent use of steel to reach 1,460 million tons -growing 3.1%- in 2013 (versus 1.5% annual growth of 2012).

Much of the global growth was driven by China (China´s consumption is expected to grow 6%). Global demand growth, ex-China, would be much weaker of only 0.7%. In 2014, Chinese economy and steel consumption are expected to decelerate. According to worldsteel, the world as a whole would grow 3.3% in 2014. Concerns also arise about the rest of the BRIC countries not  growing at the expected pace and about a similar issue taking place in the USA. These facts increase uncertainty about the future and add up volatility.

About Alacero

Alacero –Latin American Steel Association- is the organization that brings together the Steel Value Chain of Latin America to promote the values of regional integration, technological innovation, corporate responsibility and social and environmental sustainability. Founded in 1959, Alacero is formed by 47 companies of 25 countries, whose production –of about 70 million annual tons- represents 95% of the steel manufactured in Latin America. Alacero is a Special Consulting Organization to the United Nations and is recognized as International Non-Government Organization by the Republic of Chile, host country of Alacero´s headquarters.