Rising Calls for Trade Defense Measures in Latin America
The Latin American steel industry, after a year marked by growing concerns over "predatory and unfair" imports, is expected to witness an uptick in trade defense measures in 2025. Industry experts anticipate that countries in the region will strengthen their efforts to protect domestic steel producers, especially against cheap imports from China, Russia, and Vietnam. These measures are seen as vital to stabilizing the financial and operational well-being of the local steel industry.
An Increasing Trend in Anti-Import Actions
Over the past few years, there has been a notable increase in trade defense actions within Latin America. Countries such as Brazil, Chile, Colombia, and Mexico have become vocal in their efforts to curb unfair competition from foreign steel exporters. These actions typically involve anti-dumping duties, countervailing duties, quotas, suspension agreements, and tariff hikes aimed at shielding domestic producers from the impacts of cheap imports.
Global Steel Demand and Excess Supply
Since the end of the COVID-19 pandemic, global steel demand has gradually returned to pre-crisis levels. However, supply has remained high, creating an imbalance. Bello notes that the steel industry, particularly in China, is so large that it will take time for the supply pipeline to adjust to the reduced demand. China's steel exports to Latin America have particularly drawn criticism for their competitive prices, often below the production costs of local producers, causing significant pressure on the region’s steel market.
Trade Defense Measures Gaining Traction
Fastmarkets reports that the rise in trade defense actions, especially against Chinese imports, was expected. However, governments in Latin America have been slower to adopt measures like anti-dumping duties compared to the previous surge of Chinese steel exports between 2015-2016. Despite this, industry experts anticipate that 2025 will see a more aggressive approach toward implementing these measures as investigations and requests for action, initiated by local companies, have been on the rise in 2024.
Brazil’s Steel Measures and Quota System
Brazil, one of the region's largest steel producers, has already adopted a one-year tariff quota system for its steel imports, effective from June 2024. Despite the criticism that the quotas are too large, Brazilian authorities are committed to updating the parameters of the policy after a year. The country's steel association, Aço Brasil, is pushing for additional measures such as definitive anti-dumping duties to further protect domestic industries from cheap imports.
Concerns Over Anti-Dumping Tariffs in Colombia
In Colombia, there is growing concern regarding the extension of anti-dumping tariffs on imports of hot-dipped galvanized steel and Galvalume, which were imposed in June 2024. The current tariff stands at 29.9% and was introduced for an initial six-month period. Colombian steel producers are hopeful that the tariff will be extended, although no official statement has been made. The local market remains cautious, with traders anticipating that the extension of the tariff will prompt price adjustments in the industry.
Chile’s Struggles with Trade Measures
Chile, despite pressure from local industries, did not extend its only trade defense measure after it expired in September 2024. The measure was in effect for only six months, and the country’s largest steel producer, Compañía Siderúrgica Huachipato, faced significant financial challenges, forcing it to suspend its steel operations indefinitely. This highlights the difficulties faced by steel producers in Chile, which is struggling with both commercial and financial obstacles in the global steel market.
Mexico and Potential Tariffs Amid Political Tensions
The political landscape in Mexico, especially following the election of U.S. President-elect Donald Trump, has led to market speculation about the possibility of more trade defense measures. Mexico has been under pressure from the U.S. to adopt tariffs, and local officials, including President Claudia Sheinbaum, have even suggested retaliatory tariffs against the United States. However, analysts believe that Mexico may instead impose tariffs on countries like China, strengthening its ties with North America while protecting its domestic steel industry from unfair competition.
The Road Ahead for Latin American Steel Protection
With the growing concerns over the impact of cheap foreign imports, especially from China, Latin American countries are gearing up to adopt more trade defense measures in 2025. These policies aim to protect local steel industries, stabilize the market, and ensure fair competition. As investigations and requests for action continue to rise, the steel trade defense landscape in Latin America is set to evolve further in the coming years.
