Sustainability, decarbonisation, employment, education and cultural diversity are the key factors supporting steel industry development in Latin America, agreed participants of Latin American steel association Alacero’s annual conference held in Monterrey this week.

While executives at major steel companies avoided discussing the outlook for production and price developments in 2023, they noted that most problems facing the global economy, such as recession, should come to an end next year.

“There is uncertainty in Latin America, but there are also opportunities to be taken advantage of since we expect a more limited economic contraction in our region,” Ternium chief executive Máximo Vedoya observed at the event monitored by Kallanish. The recession will be more accentuated in Europe due to the war in Ukraine, while in China it will depend on the continuity of the zero-Covid policy and the evolution of the construction sector.

“Many factors have made us change our mentality in the LatAm value chain, such as re-shoring. The United States began to lead this trend to get out of hyper-globalisation, realising that value chains have to be closer to home and in places where they know that the rules of the game are much clearer.”

Vedoya said the challenge of re-shoring and nearshoring lies in how governments work with companies, to ensure the relocations remain in Latin America. "This process is not only an expression of willingness to invest, but it also includes the creation of conditions for companies to come to the region, such as infrastructure and energy supply, among others," Vedoya commented.

“Mexico has a lot of potential for investments and foreign companies are welcome to come here to produce the steel that we currently import," said Deacero ceo David Gutiérrez Muguerza. “We should be more strategic as an industry and not continue to increase the output of products that already have overcapacity. Instead, we have to invest in manufacturing those products that we are importing today.”

According to Muguerza, Mexico has not been able to take advantage of the opportunity to increase its share of US imports. Despite a 5% drop in Chinese-origin entries into the US, Mexico's share is just 0.5%, he explained.

On the other hand, ArcelorMittal Brasil and Gerdau executives Jefferson de Paula and Gustavo Werneck emphasised the great challenges of the region's steel companies lie in decarbonisation, investment in personnel, mentoring and coaching.

“Decarbonisation is a great challenge, and it has to follow a well-defined path, from the acquisition of equipment to the implementation of innovations in the processes. The change in production will come more and more, supported by demand from our customers for greener products,” de Paula pointed out. “Brazil has enormous potential to develop renewable energy and hydrogen in Latin America, while Mexico and Argentina are adapting the future of their steel mills to natural gas, having large reserves.”

According to Werneck, the region's steel companies not only have to set specific goals for their decarbonisation processes but also ensure they comply with obligations. "The reduction of CO2 emissions is a great challenge for the present and the future of Gerdau, as well as the investment in the safety and education of our employees, to which we must dedicate 70% of our time as executives," he observed.