The Latin America Steel Market: an Overview Francisco Leal OECD - - PowerPoint PPT Presentation

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The Latin America Steel Market: an Overview Francisco Leal OECD - - PowerPoint PPT Presentation

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The Latin America Steel Market: an Overview Francisco Leal OECD Steel Committee . 25-26 March 2019, Paris, FR Introduction Economic dynamics decelerated in 2018, with differences between countries and subregions: Low levels of per

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SLIDE 1

The Latin America Steel Market: an Overview

Francisco Leal OECD Steel Committee . 25-26 March 2019, Paris, FR

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SLIDE 2

Introduction

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  • Economic dynamics decelerated in 2018, with differences between

countries and subregions:

  • Low levels of per capita income
  • Overvaluation of the dollar against local currencies
  • US protectionist measures in world trade
  • According to the IMF the region grew by 1.2% in 2018, and activity is

expected to accelerate further to 2.2% in 2019 and 2.7% in 2020.

  • Global growth will be slow in 2019, with trade tensions between China

and USA, which can be game changer in Latin America.

  • Recovery is widespread throughout the region; stronger growth in the

US, end of recessions several countries, as well as better commodity prices.

  • The outlook has deteriorated: global trade environment and less

stimulus generated by the combination of disinflation and falling interest rates.

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SLIDE 3

Besides the 2018 setback, LA is recovering

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Source: IMF. WEO Feb 2019 (e): estimated

1.3 0.3

  • 0.6

1.3 1.2 2.2 2.7

  • 2.0
  • 1.0

0.0 1.0 2.0 3.0 2014 2015 2016 2017 2018 2019(e) 2020(e)

GDP (%)

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SLIDE 4

Latin American steel market in 2018

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Million Tons

Source: Alacero

67.7 52.9 25.1 10.6 67.0 53.7 22.7 9.8

10 20 30 40 50 60 70 80

Consumption Production Imports Exports

2017 2018

  • 1.0%

1.6%

  • 9.7%
  • 7.9%
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SLIDE 5

Imports eased, but still high

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Million tons

Imports/ASU

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SLIDE 6

Main driver for consumption: Construction. Steelmaking mainly BOF, flat & long products

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51.46% 0.81% 1.76% 14.52% 18.12% 12.49% 0.84%

Steel Weights in LA

Construction Domestic Appliances Electrical Equipment Mechanical Machinery Metal Products Automotive Other Transport

48% 49% 3%

Finished Production

Longs Flats Seamless Tubes

82% 82% 18% 18%

2017 2018

PRIMARY IRON

Pig Iron Sponge Iron 44% 46% 56% 54%

2017 2018

CRUDE STEEL

EAF OBC

Raw Production

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SLIDE 7

Commodities caused better performance, but manufacturing must be addressed

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Source: UNCTAD *Does not include gold and precious stones

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SLIDE 8

Latin America GDP outlook

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GDP Growth (%)

Source: Latin America from IMF WEO Feb 2019. Others from National Regional Secretaries. (e): estimated

Country 2015 2016 2017 2018 2019(e) 2020(e) Latin America

0,3

  • 0,6

1,3 1,2 2,2 2,7 Argentina 2,7

  • 1,8

2,9

  • 2,6
  • 1,6

2,2 Brazil

  • 3,5
  • 3,5

1,0 1,4 2,4 2,3 Chile 2,3 1,3 1,5 4,0 3,4 3,2 Colombia 3,0 2,0 1,8 2,8 3,6 3,7 Mexico 3,3 2,9 2,0 2,2 2,5 2,7 Peru 3,3 4,0 2,5 4,1 4,1 4,1 Venezuela

  • 6,2
  • 16,5
  • 14,0
  • 18,0
  • 5,0
  • 2,0
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SLIDE 9

Steel Drivers in line with expectations

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Source: Alacero (e): estimated

  • 1.0
  • 1.4

0.5 1.0 1.8 2.3

  • 4.1
  • 5.4

2.7 3.6 3.8 4.2

  • 6.0
  • 4.0
  • 2.0

0.0 2.0 4.0 6.0

2015 2016 2017 2018 2019 (e) 2020 (e)

Industrial Production SWIP

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SLIDE 10

Latam ASU Outlook for 2019-2020

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Million Tons

Other Latam: Bolivia, Costa Rica, Cuba, Dominican Rep., Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, Trinidad & Tobego and Uruguay.

Country 2018 2019 2020

Latam 67,0 68,9 72,3 Argentina 4,8 4,5 5,0 Brazil 20,6 21,7 22,9 Chile 2,7 3,1 3,4 Colombia 3,4 3,7 3,8

Country 2018 2019 2020

Mexico 25,4 25,9 26,1 Peru 3,8 3,9 4,1 Venezuela 0,2 0,1 0,1 Other Latam 6,1 6,0 6,9

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SLIDE 11

Latam ASU Outlook 2019-2020 (%)

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Growth Rate (%)

Other Latam: Bolivia, Costa Rica, Cuba, Dominican Rep., Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, Trinidad & Tobego and Uruguay.

Country 2018 2019 2020

Latam

  • 1,0% 2,8%

4,9%

Argentina

  • 1,9% -6,2% 10,2%

Brazil

7,3% 5,6% 5,5%

Chile

  • 0,7% 13,1% 8,4%

Colombia

  • 4,3% 9,1%

3,7%

Country 2018 2019 2020

Mexico

  • 3,9% 1,8%

0,8%

Peru

3,4% 1,8% 6,1%

Venezuela

  • 66,4% -29,1%
  • 0,1%

Other Latam

  • 8,3%
  • 1,8%

14,7%

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SLIDE 12

Final comments

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  • In the Latin America region, the steel industry and the economic

performance is entering a phase of recovery, nevertheless we foresee big potential impacts as a function of:

  • Global trade tensions, commodities prices, foreign exchanges

and interest rates.

  • Economic uncertainty about the short-term political scenarios

(Argentina, Venezuela, Ecuador).

  • The region ability to implement structural reforms directed to

productivity, innovate and assimilate new technologies.

  • Cope with immigration issues.
  • The challenges facing Latin America continue to be linked to

various internal and external factors, but with a growth trend.

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SLIDE 13

The Latin America Steel Market: an Overview

Francisco Leal OECD Steel Committee . 25-26 March 2019, Paris, FR