Latin America Steel Demand To Fall In 2022-Industry Report

• Steel demand in Latin America could dip through 2022 as the industry faces regional inflationary pressures, price hikes from the Russian invasion of Ukraine and political instability.
• The regional steel sector rebounded in 2021 following coronavirus-related restrictions in 2020, topping previous production levels, according to the report from the Latin American Steel Association (Alacero).
• However, with the attack on Ukraine causing energy prices to skyrocket, as well as inflationary strains and unpredictable election cycles in Latin America, the largest steel-using industries, like construction and auto production, have shrunk so far in 2022. Further, demand is expected to fall 2% (y-o-y) in 2022 from a y-o-y growth of 26.6% in 2021 owing to a confluence of negative factors.
• The construction sector in Latin America contracted 3% in the first quarter, while the automotive sector fell 1.2% year-over-year from February to April. In Mexico alone, the construction sector contracted 0.2% year-over-year in May, while its mining sector shrank 1.7%, according to the country's statistics agency. However, demand could recover by 2023, growing some 4% from this year.
• Infrastructure projects like the Vaca Muerta pipeline could give Latin America, and the steel industry, a much-needed boost. "This puts us in a privileged position, and we have great steel companies and engineering with the capacity to carry out the titanic task of building pipelines, creating direct and indirect jobs,” Wagner said.

(Source: Reuters)