The Latin American steel industry must set restrictions on scrap exports to protect its industry the Latin American Steel Association (Alacero) warned amid news that China’s demand for scrap will increase this year.
The Asian nation is transforming its steel production from blast furnaces to electric arc furnaces (EAFs), which will require a significant amount of scrap compared to what the country consumed last year, Alacero said in a statement on Mar 8, without disclosing the volume China may need.
Alacero noted the urgency of implementing temporary quotas on scrap exports in Latin America, following Colombia’s example, to ensure the availability of scrap for domestic consumption, which is slated to rise due to the development of more infrastructure projects across the region.
The Colombian government implemented a ceiling on exports of ferrous, copper, aluminum, and lead scrap until March 2021. The South American country set export quotas of 28.404mt on foundry scraps of iron or steel and waste ingots of iron or steel, and export quotas of 38.675mt for scrap exports of copper, aluminum, and lead.
The quotas may become crucial for countries like Mexico where the supply of materials such as #1 busheling is expected to tighten following the production cuts by automakers such as Chrysler and GM in Mexico due to the semiconductor chip shortage. The average consumption of scrap to produce a tonne of crude steel is about 500mt, according to figures from the Latin American steelmaker Ternium.
Latin American crude steel production fell by 8.4pc to 55.5mn mt in 2020, from 60.6mn mt in 2019 due to the effects of the COVID-19 pandemic. China’s steel production rose by 5.2pc to 1.05bn mt in 2020 compared to the previous year, according to the World Steel Association.