In 2024, Chilean steel production witnessed major challenges like growing competition in the form of imported steel as well as shutting down its largest steel mill. Steel consumption within the country showcased a resilience level that exceeded preliminary projections.
Overview of Chile’s Steel Industry in 2024
Chile’s steel industry has been part of the country’s economic backbone for decades, driving sectors such as construction and mining. But 2024 brought unforeseen challenges. The surge in cheap imports of steel from countries like China surged competition, and local manufacturers were squeezed financially. It came to a head with the shutdown of Compañía Siderúrgica Huachipato (CSH), the nation’s biggest steel mill, in September 2024.
Apparent Steel Consumption Trends
Despite the challenges on the domestic front faced by the industry, visible steel consumption in Chile showed a more resilient performance than had been projected. As per information released by the Chilean steel institute ICHA, the first six months of 2024 showed an apparent steel consumption of 1.10 million tonnes. Though the number was a fall of 6.7% from the corresponding period in the earlier year, it was milder than many industry experts had projected.
Factors Contributing to Resilient Consumption
Several factors contributed to this better-than-expected consumption:
- Construction Sector Activity: The construction industry, a major consumer of steel products, maintained a level of activity that supported demand. Ongoing infrastructure projects and residential developments continued, albeit at a moderated pace.
- Government Initiatives: In response to the industry’s challenges, the Chilean government launched the Biobío Industrial Strengthening Plan. This initiative aimed to revitalize regional industries and included measures to support steel consumption through accelerated public investment in infrastructure.
- Market Adaptation: Domestic steel consumers adapted to the changing market dynamics by diversifying their supply chains and optimizing steel usage, which helped sustain demand levels.
Impact of Imports on Domestic Production
The increase in steel imports from China had a significant effect on local production. The imported steel was being offered at competitive prices, causing the local producers to lose a considerable share of the market. This competition was a key contribution to the financial distress of CSH, eventually closing down after operating for 74 years.
Government Measures and Industry Response
In light of these challenges, the Chilean government implemented several measures to support the industry:
- Anti-Dumping Duties: Temporary anti-dumping tariffs were imposed on specific steel products to protect domestic manufacturers from unfair pricing practices. However, these measures provided limited relief and were insufficient to prevent the closure of major production facilities.
- Economic Strengthening Plans: The Biobío Industrial Strengthening Plan included 32 strategic measures aimed at revitalizing the regional economy. These measures focused on accelerating public and private investments, supporting affected workers and suppliers, and exploring new industrial sectors, including the development of green steel initiatives.
Future Outlook for Chile’s Steel Consumption
The increase in steel imports from China had a significant effect on local production. The imported steel was being offered at competitive prices, causing the local producers to lose a considerable share of the market. This competition was a key contribution to the financial distress of CSH, eventually closing down after operating for 74 years.
Conclusion
In summary, although 2024 brought important challenges to the steel industry of Chile, Chilean steel consumption proved resilient and did better than initially anticipated. With the integration of government actions, sectorial adaptation, and continued activity in major sectors, Chile was able to get through a troubled period, paving the way for an even stronger and more sustainable steel industry in the future.
FAQs
What led to the closure of Chile’s largest steel mill in 2024?
The closure of Compañía Siderúrgica Huachipato (CSH) was primarily due to intense competition from low-cost steel imports, especially from China, which resulted in significant financial losses for the company.
How did steel consumption in Chile perform in the first half of 2024?
In the first half of 2024, Chile’s apparent steel consumption was 1.10 million tonnes, a 6.7% decrease compared to the same period in 2023. Despite the decline, this performance was better than many analysts had anticipated.
What measures has the Chilean government taken to support the steel industry?
The government implemented several measures, including imposing temporary anti-dumping duties on certain steel imports and launching the Biobío Industrial Strengthening Plan, which comprises 32 strategic initiatives aimed at revitalizing the regional economy and supporting the steel sector.
What is the Biobío Industrial Strengthening Plan?
It is a government initiative designed to revitalize the industrial sector in the Biobío region, particularly in response to the challenges faced by the steel industry. The plan includes measures to accelerate public and private investments, support affected workers and suppliers, and promote new industrial sectors, such as green steel production
How has the construction sector influenced steel consumption in Chile?
As a major consumer of Vietnam steel, the construction sector maintained ongoing infrastructure projects and residential developments in 2024. This sustained activity contributed to a better-than-expected performance in steel consumption, despite broader industry challenges.
What are the prospects for green steel production in Chile?
The government of Chile is also looking at the possibility of developing green steel as it diversifies its industry. Its strategies include investing in technology parks focused on energy transition and opening public bids for iron ore concessions, subject to utilizing the extracted ore in the production of green steel