China’s steel dumping is causing significant disruption in Peru’s steel industry, prompting investigations and potential anti-dumping measures by Indecopi in response to severe impacts on local manufacturers. The practice has led to dramatic declines in production and sales, with local industries unable to compete against artificially low prices. There is an urgent need for stronger governmental action to protect domestic markets from ongoing unfair competition.
China’s strategy of steel dumping is severely affecting the Latin American steel industry, causing significant disruptions in local markets and threatening jobs and economic stability. In response to the influx of cheap steel and unfair competition, several Latin American countries have begun imposing tariffs and anti-dumping measures against Chinese steel imports.
In Peru, the National Institute for the Defense of Competition and the Protection of Intellectual Property (Indecopi) initiated investigations into the dumping of hot-rolled carbon steel pipes, stainless steel sinks, and steel wire rods by Chinese suppliers. The decision to investigate was prompted by complaints from local manufacturers, such as the leading producer of stainless steel sinks, Manufactura de Metales y Aluminio Record S.A., and Corporación Aceros Arequipa S.A.
The evidence concerning the stainless steel sink sector revealed that Chinese imports damaged the local industry significantly, showing a staggering dumping margin of 491.5 percent from July 2023 to June 2024. Sergio Cesarin, an academic at Tres de Febrero National University, expressed concern, stating that the dumping margin “seems brutal to me.”
Dumping refers to the practice of selling products at prices lower than their production costs to eliminate competition and monopolize the market. This has resulted in a 71 percent decline in local production of stainless steel sinks between January 2021 and June 2024 and a 45 percent decrease in domestic sales during the same period. Moreover, imported sinks from China were priced over 80 percent below their actual value, affecting local market pricing.
Data from state agency Andina indicated that profitability and productivity within the local industry deteriorated sharply. Production per worker fell over 73 percent, and unit profit margins plunged by 88 percentage points, turning negative in early 2024. Additionally, inventory levels have dropped by more than 65 percent.
Indecopi has communicated its findings to Chinese authorities as part of the investigation, which is expected to last for at least six months and may extend to nine. As inspections proceed, the imposition of anti-dumping measures against Chinese steel could follow if unfair practices are confirmed.
China has emerged as the world’s largest steel producer, with numerous companies operating under state control. The centralized economy provides these firms with vast financial resources and circumvents conventional international trade rules. Investigative reports highlight China’s alleged unfair practices, with Cesarin commenting on government subsidies supporting strategic industries, including steel.
Since 2010, significant changes have occurred in the international steel trade; China, facing overcapacity, has aimed its production at international markets using low pricing to retain employment and social stability. The Latin American steel sector, despite adhering to rigorous standards, struggles to compete against the artificially low prices of Chinese steel.
Countries like Mexico, Brazil, and Argentina have experienced factory closures and job losses due to intense competition from China and have responded with tariffs on imports. Cesarin explained that negotiating trade safeguards with China involves complex discussions with the Chinese government—a challenge for countries like Peru with many active Chinese investments in mining and infrastructure.
In conclusion, Cesarin urged Latin American governments to adopt robust measures against the repercussions of Chinese steel. He emphasized the need for the Peruvian government to prioritize the protection of its domestic steel industry, uphold employment, and pursue equitable trade practices with China.
In summary, China’s dumping of steel products is creating a serious crisis for the Latin American steel industry, particularly in Peru. The investigations by Indecopi and the implementation of potential anti-dumping measures illustrate the necessity for regional countries to protect their local industries from unfair competition. Greater commitment from Latin American governments is essential to ensure the stability and prosperity of domestic markets.
Original Source: dialogo-americas.com
