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Steel in the Western Hemisphere should face no immediate consequences following the US capture of Venezuelan President Nicolás Maduro, but long-term forecasts remain uncertain as the US takes interest in developing the world’s largest proven untapped oil reserves.
US forces captured Maduro during the early hours of Saturday January 3 after years of sanctions and economic pressure on the South American country. Maduro and his wife, Cilia Flores, face charges involving narco-terrorism and drug trafficking. The pair pled not guilty to four charges in a New York court on Monday January 5.
“The illegitimate dictator, Maduro, was a kingpin of a vast criminal network, responsible for trafficking colossal amounts of deadly and illicit drugs into the United States,” US President Donald Trump alleged during a January 3 news conference announcing the capture of Maduro.
Global political uncertainty is on the rise following the aggressive takeover of Venezuela. Ahead of the extradition of Maduro to the US, Trump seized two tankers of sanctioned Venezuelan crude oil and blockaded the export of oil from the country.
“We are going to run the country until we can do a safe, proper and judicious transition,” Trump said on January 3.
One Brazilian trader told Fastmarkets that the decision to capture and extradite Maduro was more political than resource-driven.
“Senior [US] executives believe the US has lost influence in South America, particularly to China and Russia, which is seen as unacceptable given the region’s strategic importance,” the trader said. “Geopolitics comes first. Oil, natural resources and drug trafficking come later.”
Trump called Maduro’s actions and collusion with drug cartels a “gross violation of the core principles of American foreign policy,” citing the Monroe Doctrine in the January 3 conference. Established in 1823, the doctrine was a foreign policy plan set forth by former President James Monroe to protect US interests in the Western Hemisphere. The US “forgot about” the doctrine, according to Trump, but “under our new national security strategy, American dominance in the Western Hemisphere will never be questioned again.”
Since Maduro’s capture, the US has seized two additional ships carrying sanctioned supplies. The Russian-flagged Marinera was captured in the morning on Wednesday January 7 in the North Atlantic, while the Panamanian-flagged M Sophia was halted by the US Coast Guard in the Caribbean later that day.
Delcy Rodríguez, Venezuela’s vice president and oil minister, was sworn in as acting president on Monday January 5, enabled by the Trump administration, according to multiple media reports. Rodríguez has promised to work with the US amid the takeover.
Meanwhile, Venezuela has pledged 30 million-50 million barrels of crude to the US, Trump said via a social media post on Tuesday January 6.
While Trump has yet to detail US plans for operating the Venezuelan government, the president has set his sights on tapping into the world’s largest crude oil reserves, which total 303 billion barrels (17% of global reserves), according to the US Energy Information Administration (EIA).
“We’re going to get the oil flowing the way it should be,” Trump said on January 3. “We’re going to have our very large United States oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country.”
Producing the heavy-sour crude that Venezuela produces in its Orinoco Belt is not without challenges. The state-run oil company Petróleos de Venezuela, S.A. (PDVSA) has “significantly reduced operations,” a second Brazilian trader told Fastmarkets, with “[very basic] operations.”
Development of the crude reserves will not be immediate due to crumbling infrastructure and political uncertainty, sources said.
“Venezuela used to produce a lot of oil, but its infrastructure and steel industry are very damaged,” a Mexican producer told Fastmarkets. “Even if oil production restarts, they don’t have the pipes, steel, equipment or factories to support it.”
In the past, “[budgetary] constraints at Venezuela’s state oil company PDVSA and a lack of qualified technical personnel and foreign direct investment have all hampered Venezuela’s oil and natural gas development,” a 2024 report from the EIA explained.
The state-run producer operates five refineries in the country, according to the EIA. But Venezuela produces heavy-sour crude oil, which requires specialized refineries to be processed, EIA data shows, “making development economically, environmentally and technologically costly.” To transport, the crude must also be mixed with diluents.
The oil industry in Venezuela was mostly nationalized in 1976 by former Venezuelan President Hugo Chávez, with the remaining privately operated fields being nationalized in 2007.
Trump called the Venezuelan nationalization of the oil industry the “largest theft of property in the history of our country” on January 3.
But Trump is determined to get the barrels out of the ground.
“We’re going to rebuild the oil infrastructure, which will cost billions of dollars. It’ll be paid for by the oil companies directly,” Trump said.
To rebuild the Venezuelan oil industry, an influx of steel would be needed to repair and revitalize the production infrastructure, sources said. But market sources were uncertain about the sourcing for that steel.
“Venezuela once had Sidor, a mill comparable in size to Brazil’s Usiminas, but it was nationalized under Chávez and has since deteriorated, operating at low volumes with poor-quality output,” the first trader said.
Venezuela produced just 29,000 tonnes of steel in 2024, according to the latest data from the World Steel Association (worldsteel), and production has hovered around the same level since 2020.
“While Venezuela still exports some rebar and billet, mainly to countries such as Colombia, it has largely lost its relevance in the steel industry in recent years,” a second Mexican producer said.
To revive Venezuela’s lackluster steel industry, the country would need a flood of foreign investment, sources said. But “sources point to early mobilization around credit lines for projects in Venezuela,” the first trader said.
Oil companies would have to source steel elsewhere to build up Venezuelan infrastructure, sources said. US-based companies could source steel from US producers, potentially reviving the depressed oil country tubular goods (OCTG) and line pipe markets.
Chronic oversupply of OCTG and line pipe in the US market has held prices mostly unchanged for the last four months, after buyers ramped up imports ahead of the reintroduction of Section 232 tariffs on steel. Persistently weaker oil prices have also dampened US OCTG and line pipe demand, but the development of Venezuela’s oil industry could lead to a demand increase in the long term.
“In the short to medium term, [Venezuela] would have to import most of the infrastructure, likely from the US, Europe or China,” the first Mexican producer said. But “rebuilding local capacity would take years and a lot of money.”
Fastmarkets last assessed the monthly steel OCTG API 5CT – Casing J55, fob mill US at $1,375-1,425 per ton on December 10, stable since September.
Fastmarkets assessed the monthly steel ERW line pipe (X52), fob mill US at $1,400-1,450 per ton on December 10, unchanged since October 8.
The turmoil is expected to do little to the steel industries in other Latin American countries, sources said. Indirect effects, like cheaper energy prices, might lower costs for producers, but that is not expected to happen in the short term.
Mexican producers said the action in Venezuela will not have any direct effect on the Mexican steel market because of the minimal amount of trade between the countries. But as the global landscape changes, Mexican steel could see a shift as overall steel demand rises.
“I believe it’s too early to see the impacts; the landscape is changing, and for Mexico, as a key player, there will undoubtedly be impacts in the future,” a third Mexican producer said.
But tensions are high between Mexico and the US. Trump has threatened action in the country to defend against drug cartels, alongside a slew of tariffs from the US, which have hampered trade. Mexican President Claudia Sheinbaum Pardo has dismissed this as a violation of Mexican sovereignty, but tumultuous relations with the US, Mexico’s largest trading partner, have led to a plummet in exports and steel production.
Mexico has attempted to appease the Trump administration by implementing its own tariffs on a variety of steel goods to counter transshipment from Asia, a move sources said could secure Mexico a better position when the United States-Mexico-Canada Agreement (USMCA) is renegotiated later in 2026. But until the trade agreement is renegotiated, Mexican steel market participants remain wary.
Fastmarkets’ latest calculation of the weekly steel hot-rolled coil index, delivered Monterrey, Mexico was 13,638.36 Mexican pesos ($762) per tonne on Friday January 2, down marginally from 13,688.97 pesos per tonne a week earlier, on December 26.
Fastmarkets’ steel hot-rolled coil index, delivered Bajio, Mexico was calculated at 14,093.88 pesos per tonne on Friday, down from 14,225.15 pesos per tonne on December 26.
Some Brazilian steel industry participants have noted a potential opportunity for investment as Trump turns his eyes to Latin America.
“Brazil, as the largest power in Latin America, is clearly on Washington’s [radar]. The current situation could turn positive, as the US is already structuring investment and low-interest financing programs for Venezuela,” the first trader added. “Brazil could benefit from this, as US companies may rely on Brazilian steel for construction projects.”
Brazil’s domestic market faced headwinds in 2025 amid a flow of imports into the region, pressuring domestic prices. Market participants expect that in 2026, Brazilian steel will continue to be defined by the macroeconomic effects of import policy and the upcoming election.
“With [the recent development in Venezuela], depending on how things unfold, there is a possibility that the market may begin to anticipate a change in government, or an exit of the left from power in Brazil,” a Brazilian distributor told Fastmarkets. “This could indeed have a significant impact on the steel sector. It could affect private investment, both domestic and foreign, with companies looking to Brazil as a destination for investment.”
But according to the distributor, “it is still too early” to tell.
Fastmarkets’ weekly steel slab export, fob main port Brazil was assessed at $480-490 per tonne on January 2, unchanged since December 5.
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