The automotive industry in particular was significantly affected by restrictions imposed to fight the spread of Covid-19. Auto output fell by more than 90% year on year during April in the main producing countries: Mexico, Brazil and Argentina.
“Economic performance [in Latin America] was already weak before the pandemic,” the president of Alacero, Francisco Leal, said in a webinar hosted by niobium producer Companhia Brasileira de Metalurgia e Mineração (CBMM) on Tuesday June 30. “On top of the automotive sector, construction was also greatly affected by the pandemic.”
Hardships already faced by steelmakers in the region made the demand crisis worse for Latin America, Leal added.
These issues included global trade conditions considered unfair by the industry, especially after the some Chinese exports were diverted to Latin America when the United States imposed a 25% tariff on imported steel under Section 232?; high internal costs in some countries like Brazil; and the lower contribution of the overall industry to gross domestic product (GDP), particularly in Brazil.
Alacero had already stated that the steel industry was running at 42% capacity utilization in April, amid the tumbling demand that resulted in some supply cuts.
Demand contraction has put Latin America steel export prices under pressure in the past few months, but they have been recovering due to the supply reduction and amid higher Chinese prices.
Fastmarkets’ weekly assessment for steel hot-rolled coil (dry) export, fob main port Latin America was most recently at $435-445 per tonne on June 26, stable from a week before but higher than the year’s lowest level of $405-415 per tonne on June 12.
The assessment was at its 2020 high of $520-525 per tonne on February 14, before the pandemic hit the region.
Aluminium also set to fall
Aluminium consumption will also drop this year in Brazil due to the pandemic, the president of aluminium association Abal, Milton Rego, said on Tuesday during the webinar. Companies are facing difficulties securing cashflow amid this crisis, and some are struggling to manage their balance sheet in the short term, he added.
Rego had already told Fastmarkets on Friday that aluminium consumption is set to fall by double digits in 2020.
“[As was the case for steel,] the transportation sector saw a greater impact from the pandemic,” Rego said on Tuesday. “Demand from the packaging business is decreasing at a slower pace.”