The latest figures from the industry in Latin America reflect the climate of deceleration in global trade and the threat of deindustrialization that we identified in regions affected by trade tensions among the giants of the economy.

Low economic growth and insufficient public investment caused Mexico's GDP growth to fall 31% in the period, and the forecast for this year is to be 15% lower. The Mexican economy is rapidly losing steam and is pulling Latin American indices down. The "short deceleration" forecast by investors was not confirmed, postponing the recovery of confidence in business and clogging exports. Mexico represents 49% of the negative accumulated balance of crude steel produc-tion, 52% of the difference in the production of rolled steel and 49% of the deficit in the Latin American consumption balance.

In this scenario, the iron and steel market of the region during January-April 2019 presented a 4% drop in the consumption of rolled steel compared to January-April 2018. The regional production of crude steel and rolled steel until May fell 5% and 8%, respectively, versus January-May 2018. However, although presenting a cumulative deficit of 206 thousand tons in the production of rolled steel compared to 2018, the month of May stands out as the most productive of the last 7 months. Thus, the expectations for the year are growth, although the scenario is not as positive as 2018.

The region increased its imports 0.1% between March and April 2019, pointing out a 3% increase compared to January-April 2018. The share of imports in regional consumption remained at 37% in relation to the report above, in contrast to 35% in January-April 2018. It confirms the dependence of consumption on imported rolled steel, in the face of falls in cumulative production. The deficit registered in January-April 2019 was 4.8 Mt, with 384 thousand tons more than January-April of the previous year (4.4 Mt).

Crude steel production falls, but rolled steel grow

Despite negative oscillations in the same accumulated period of 2018, derived from the variation in consumption due market uncertainties - with the general production of crude steel 1% lower -, the production of rolled steel increased 3% in May , before April 2019.

Crude Steel. Latin America had a production of 5.2 Mt of crude steel in May, 1% lower than that registered in the same period of 2018 (5.3 Mt). For the accumulated of the year of 2019, 25.9 Mt were produced, 5% less than January-May 2018 (27.1 Mt). The same comparing the accumulated of the first four months that also showed 5% of fall, but the value identified in May was 0.2% higher than the average of January-April. In the year, Brazil is the main producer with 14.0 Mt, followed by Mexico with 8.1 Mt, representing respectively 54% and 31% of the annual regional total. Highlighting that the cumulative deficit in crude steel production in Mexico was 622 thousand tons (-7%), making up 49% of the regional deficit (1.3 Mt). Of the 5% drop recorded for Latin America, 3% is composed of Mexican casualties.

Rolled Steel. The region produced 4.4 Mt of rolled steel in May, 5% less than the same period of 2018 (4.6 Mt). In the year there was 21.1 Mt, representing a drop of 8% compared to the first 4 months of 2018 (22.9 Mt). The comparative accumulated in the previous report pointed to a 9% drop. The main producers in the year are Brazil with 9.4 Mt (45% of the Latin American total) and Mexico with 7.3 Mt (35% of the Latin American total). About rolled steel, from the 1.8 Mt accumulated deficit, 52% is represented by Mexican values (955 thousand tons). Of the 8% regional drop, 4% was driven by Mexican casualties.

Imbalance of the trade balance is accentuated

After a weak growth in 2018, the indicators of Latin America and the Caribbean impressed in the first half of 2019. But according to the World Bank's analysis of the region's GDP, the conditions of the largest Latin American economies are still unequal. In Brazil, although the conditions of work and financing have improved, the indicators remain weak. Chile and Mexico face slowdowns and the economy in Argentina continues to decline. Recent data from Colombia, on the other hand, point to a gradual expansion in development.

In contrast to global trends, trade in the region continues to expand, with export volumes growing steadily since 2018 and, recently, even surpassing the growth of imports. Despite weak global trade, regional export growth recovered, driven by trade diversion in response to bilateral US and Chinese tariffs, and by strong growth in the United States. However, according to the World Bank, as global trade slows further, the growth of exports in the region should decrease.

Imports. In April, 2.11 Mt of rolled steel were imported, 0.5% less than April 2018 (2.12 Mt). In the cumulative January-April 2019, Latin America imported 7.95 Mt of rolled steel, 3% more than the imported in the same period of 2018 (7.74 Mt). Of this total, 70% correspond to flat products (5.6 Mt), 27% to long products (2.1 Mt) and 3% to seamless tubes (222 thousand t). In April, rolled steel imports represented 37% of the region's consumption, the same percentage as in April 2019, which lacks stimuli for local industry, trade frictions and puts employment sources at risk.