Increased Chinese Incentive Threatens Latin American Steel Sector

Latin American Steel Association Alacero said that while the novel coronavirus pandemic is dampening demand in global markets, Chinese exporters have increased their tax breaks by 1,464 products since March 20. The export commodity tax deduction rate for steel products such as wire rod rose from 0%. up to 13% and hot rolled alloy coils, which increased from 10% to 13% between January 2019 and March 2020. The increase, intended to stimulate operations and strengthen China's industry, is mainly affecting the export of hot rolled products and wire rod, an increase in rebate and an increase in export income from $ 10 to $ 15 per tonne. Unfair imports can lead to plant shutdowns and job losses in the Latin American steel industry, as China's surplus is sold in the region at prices that domestic producers cannot compete with. Alacero CEO Francisco Leal said: “The most effective way to conquer new markets is through price, and the Chinese government has the financial capacity to subsidize steel, which affects Latin America, especially now that many doors elsewhere in the world are closed to them. In this region, our industry operates under market rules and we cannot compete on these terms. We need to protect regional industry and not provide free access to unfair imports. ” and we cannot compete in these conditions. We need to protect regional industry and not provide free access to unfair imports. ” and we cannot compete in these conditions. We need to protect regional industry and not provide free access to unfair imports. ”

The Latin American steel industry is competitive and operates in accordance with global management, environmental and safety standards. Among the main actions that can be taken to protect the domestic industry are more effective customs clearance, quality assurance policies required for imports, and ensuring compliance with all WTO instruments. In light of overcapacity, it is clear that this is still a centralized planning economy, not a market economy.

These new measures by the Chinese government are intended to provide immediate relief to companies, and while the year began with declining exports, they are recovering quickly. Low activity has led to record steel inventories, at least 20 million tonnes higher than the previous year.

Alesero leads efforts to raise awareness of the dangers of this unfair trade