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Opportunities and Challenges for China is Steel Export to Latin America

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Latin America is an important overseas market of China's steel industry. The development of Latin America's steel industry has a great impact on China's steel export situation. This paper briefly analyses the changes of steel market in Latin America under the influence of imported steel products and the impact on the form of steel imports in Latin America. At the same time, it forecasts the future development trend of Latin America and provides reference for the development of overseas market of Chinese enterprises.

1. Rapid growth of China's steel exports to Latin America

Latin America is an important overseas market for China's steel industry. In recent years, China's steel exports to Latin America have been growing steadily. In 2014, China's steel exports reached a historical high of 8.3 million tons, up 56% year on year, accounting for 9.8% of China's total steel exports.

In terms of product export structure, China mainly exports flat steel to Latin America, accounting for 67% of Latin America's total exports in 2014. The main products are alloy sheet coil (2.2 million tons), hot dip galvanizing (1.1 million tons) and cold rolled sheet (1 million tons). Long timber exports 2.3 million tons, including 1.2 million tons of wire and 850,000 tons of bar.

2. Import Steel Shocks Latin American Local Steel Market

There are 34 countries in Latin America. Most of these countries are developing countries or underdeveloped countries. They have high investment in infrastructure and other construction projects, so there is a large demand for steel. Previously, it can be said that steel production in Latin American countries is difficult to meet the local market demand and must be met through imports. However, in recent years, Latin American steel industry has developed rapidly and has been able to meet local demand, but steel imports are still growing rapidly. At the same time, due to the global economic slowdown, steel exports in Latin America are blocked, the steel trade deficit continues to expand, and the long-term international trade imbalance has affected the Latin American steel industry structure, while a large number of low-cost imported steel has also inhibited the production of steel in the region. Importing steel has become one of the key factors to restrain the development of Latin American steel industry.

On the one hand, Latin American steel consumption is increasingly met through imports. In 2014, Latin America imported 18.420 million tons of finished steel products, an increase of 3% over the same period last year, and imported resources accounted for about 27% of the local market share. In addition, Latin American steel exports are also declining due to global steel overcapacity and slowing demand, which has led to a decline in production in the region. For example, Latin America's steel industry scale, Brazil's capacity utilization rate in 2014 was 69%, compared with the historical average of 86%.

On the other hand, according to the Alacero survey and research, for every $1 million increase in steel imports, 46-64 direct, indirect or derivative jobs will be lost in the metal-machinery sector in Latin America. At present, there is a downward trend in employment in the steel industry in Latin America.

At the same time, low profits have led to weak investment in the steel industry. At present, Latin America's iron and steel industry is facing the "Dutch disease": the mining sector is prosperous and the customer base of the metal-machinery sector is weak, the region is moving towards the direction of "de-industrialization". In the long run, its steel industry will completely lose its customer base, and the steel industry will gradually decline.

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