Latin American April steel output falls 34% on year due to COVID-19

Latin America crude steel production in April plunged 34% on year to 3.55 million mt, induced by the coronavirus pandemic, regional steel organization Alacero said June 12.

From January to April, production decreased 14% compared to a year ago reaching 18.3 million mt, Alacero said in a statement.

According to Alacero, the decrease reflected the generalized low demand and interruption of operations in response to the effects of the slowdown.

In April, crude steel production via the BOF route decreased 22% compared with March at 3.56 million mt, an amount had not been seen since 2009.

April rolled steel production in Latin America dropped 32% on year to 2.9 million mt .

“In April, the effects of the pandemic began to spread; however, the impact has been felt mostly in Argentina and Brazil, with a decrease of 73% and 37% in rolled steel output, respectively, compared to April 2019,” Alacero said.

In a strategy to balance supply and demand, some plants across the region have shut their blast furnaces. In April and May, seven blast furnaces were closed due the pandemic representing a combined capacity of almost 7 million mt, according to Alacero.

The group said capacity utilization as of April within Latin America was at 42%, with Brazil at 43%, Mexico at 60% and Argentina at 18%.

“Latin America’s comeback will occur differently among its countries, and the region will probably be one of the last to normalize its economic activity,” said Francisco Leal, Alacero’s general manager.

Leal added the industry is a capital intensive and high fixed-cost business “that needs to work at 80% of its capacity to ensure a modern and efficient production plant, as well as retention of its human resources.”

The organization estimates that this situation will persevere until the third quarter and will be the norm for the industry in the short term.

— Priscilla Antunes