Between December 5th and 6th, Alacero participated in Paris of the 75th Steel Committee Meeting of the OECD (Organization for Economic Cooperation and Development). This industry summit gathered government representations of 34 countries, industrial associations, unions and consultancy firms.

The Committee discussed the slow growth prospects, exchanged views on the effect of excess capacity on the financial health of the industry and agreed on identifying future work for addressing it. It also expressed concerns about trade frictions in steel and raw materials trade and exchanged views on potential policy measures to improve steelmakers’ energy efficiency. Alacero along with Japan was one of the only two regions invited to present their points of view on current steelmaking global overcapacity.

Alacero began addressing that the current situation is becoming critical as global overcapacity reaches more than 500 million tonnes, which represents 36% of annual apparent steel use (comparing to historic ratios of 19%). This scenario complicates the situation of the sector.

The Latin American organization highlighted that state owned enterprises now represent a key player in the steel industry that was not present in the last overcapacity crisis of the late 90s. According to 2011 figures, SOEs account for 50% of the top 46 steel companies, and almost all of them belong to China. Moreover, 38% of the world steel production is generated at Chinese SOEs.

Overcapacity is driving exports up and prices down. These facts along with global demand slowdown and the risk of a rise in raw materials prices, are pressing on private companies profitability and are leading to increased trade frictions.

In the case of Latin America, Alacero noted that after being a net finished steel exporter, the region became a net importer. Massive imports many of them under unfair trade practices are driving anti dumping measures up. Currently, 52 investigations are under development in different countries of the region, 23 of them against Chinese companies. Also, 78 anti dumping measures are already in place, 43 against China.

Regional annual steel consumption grew 5% in 2012 (YoY), while imports increased by 26%. Latin American consumption is being supplied by imports that are forcing a drop in domestic production and intra regional trade.