ALACERO: Peru’s consumption not enough to justify flat steel production

Peruvian steelmakers Aceros Arequipa and Gerdau Siderperú are unlikely to move into flat steel production any time soon as local consumption must become stronger and more consistent, an industry source said this week.

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“There are a lot of flat steel imports in Peru, but there is still no strong consumption that justifies an investment in local production,” a well-placed Peruvian source told Steel First on the sidelines of Alacero’s 53rd Latin American Steel Conference in Santiago, Chile.

Aceros Arequipa has been finalising the installation of a new rolling mill in Peru, but this will only produce long steel, the source said.

Siderperú has also recently decided to expand its production capacity, but this too will comprise a new long steel rolling mill.

Both companies are targeting the booming demand in the Peruvian construction industry.

The strong local mining industry also requires several long steel products, the source said.

“The focus is on basic long steel and also on long steel products with more added value,” he said.

“Siderperú used to produce flat steel, but those were obsolete pieces of equipment that were shut down,” he added.

Figures from the Latin American steel association, Alacero, show there is some flat steel output in the Andean country, but in very small quantities.

In 2004-11, flat steel production in Peru reached a peak of 59,000 tonnes in 2008, then dipped to 11,000 tonnes in 2009 and 13,000 tonnes in 2010.

Output increased slightly in 2011 to 31,000 tonnes, but for 2012 Alacero predicts a fall back to 21,000 tonnes.

Those are the smallest output figures among Latin America’s seven largest economies, which show flat steel output in 2011 of 14.2 million tonnes in Brazil, 7.5 million tonnes in Mexico, 2.7 million tonnes in Argentina, 1.4 million tonnes in Venezuela, 438,000 tonnes in Chile, and 429,000 tonnes in Colombia.

However, finished steel consumption in Peru is not far removed from the figures of some of its peers.

Consumption reached 2.4 million tonnes in 2011, very close to Chile’s and Venezuela’s levels of 2.5 million tonnes and 2.6 million tonnes respectively.