Steel consumption in Central, South America to reach 40Mt in 2010 

21.Aug,2010


Following steady improvements in production and global demand, apparent steel consumption in Central and South America is expected to rise 20.2% in 2010 to 40Mt, according to Coutinho & Ferrostaal's Latin American commercial manager for special steels Alma Iglesias. 

"Construction is a major driver in this sector, accounting for 44% of steel consumption in these regions," Iglesias said at the SBB Steel Markets Latin America congress, being held in Sao Paulo on August 19-20.

The machinery industry accounts for 18% of demand, followed by the auto manufacturing industry at 16%.

Despite the positive outlook, the steel industry is still adjusting to the recent changes in raw material pricing policies, the executive said. Earlier this year, global miners adopted a quarterly backward-looking pricing mechanism, ending the benchmark system that set prices for a year.

Due to the higher volatility in prices, companies need to focus on adjusting production levels and inventories, which will therefore improve productivity, Iglesias said.

POSITIVE OUTLOOK

Steel demand is also expected to benefit from the positive economic outlook for the Latin American region in the coming years.

Latin America's GDP is expected to grow by 4.5% in 2010, with Brazil growing 6.4%, according to financial markets analyst Pedro Mader Meloni from the World Bank's International Finance Corporation.

Latin America is expected to grow 4.1% in 2011 and 4.2% in 2012, showing stability for development in the near future, Meloni said at the congress. However, with demand improving in the region and industries operating at high levels of capacity, the region could face inflationary issues over the coming years, he added.

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