Steel imports increase and local steel mills ask for protection measures
The government has delayed a decision on steel imports and the dismissal of workers of the company Paz del Río may be a first consequence of the problems that have affected domestic steel mills in recent years. We tell you what is happening with domestic steel producers.
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The low price of steel imports affects domestic production
Steel imports represent unfair competition for domestic producers. Low prices are a threat to the jobs of more than 50,000 families that depend on this activity.
Despite the recent alert from domestic steel mills, this is not a new situation. In 2013, Acerías Paz del Río, together with other domestic manufacturers requested safeguards for wire rod, coil or bar, profiles and angles and this led to contradictions with importers.
At that time, domestic steel mills were operating at 60% of their capacity due to strong foreign competition. To defend their interests and face the avalanche of steel imports, the five companies created the Colombian Committee of Steel Producers, within the National Association of Businessmen (Andi).
More than a decade later, the situation of the national producers continues to be critical, and there are still no clear answers for the national steel companies.
What the government says
The government has given an ambiguous response to the reiterated request of the steel companies, as it has combined the companies’ requests with the government’s idea of creating a new steel mill to produce flat steel, which is mainly imported.
According to Álvaro Pardo, president of the National Mining Agency (ANM), a project is being worked on to create a new steel mill in Colombia that will help to substitute steel imports. In meetings between the steel companies and the national government, the latter committed to carry out a feasibility study for the creation of this steel plant within 12 months. In a subsequent meeting, however, the government proposed that the study should be completed in half the time, i.e. 6 months.
The companies accepted and the idea was put forward that the protection measures would be approved in parallel to the completion of the study, but so far the government has not adopted any resolution to the companies’ demands.
Recently, the company Paz del Río laid off 40 workers, which provoked an angry protest from the unions that until then had been accompanying the employers in the struggle against steel imports and the defense of domestic steel. These layoffs aggravated the crisis in the sector, which has begun to show clear signs of weakening due to the increase in steel imports.
On September 4, the Ministry of Commerce, Industry and Tourism responded to the businessmen that it is “ready to support the development and competitiveness of this important productive chain. In terms of trade defense, this Ministry administers the mechanisms to correct distortions or unfair practices that cause significant damage or harm to the domestic industry and prevent it from competing on equal terms”.
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Contradiction between producers and importers of steel
Simultaneously to this process, the Colombian Chamber of Steel issued a statement, which according to its website groups companies that represent one third of the steel commercialization in Colombia and employ around 18,000 people. It mainly represents importers and groups 169 companies engaged in various stages of commercialization.
Camacero’s statement describes Paz del Río as an obsolete company with a large pension liability and affirms that Colombia does not have the financial or mineral resources for an investment of more than 2,000 million dollars and is radically opposed to the steel company’s request, which according to Camacero would make the construction of low-income housing more expensive.
Presidente @petrogustavo han empezado los despidos en la industria del acero. Ya 40 familias se han quedado sin comida a causa de su negativa a firmar el decreto de salvaguardas para proteger este importante sector de la industria nacional.
— Diógenes Orjuela (@diogenesorjuela) September 21, 2024
El aviso de CAMACERO en el diario La… pic.twitter.com/YXMeOeeVeT
It seems that the government is faced with the dilemma of supporting producers or importers and the requirement to carry out preliminary studies for an eventual flat steel mill, which under no circumstances could be materialized in the short term, may be a delay to the demand of the steel mills that are in a critical situation, especially Paz del Río.
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