According to Latin American Iron & Steel Institute, the South American steel industry has not escaped the global economic crisis. Demand for crude steel and steel products has fallen sharply in tandem with the global manufacturing slump and the cooling of China‘s once red hot economy. After years of growth, Latin America's crude steel production was flat at 67.2 million tonnes in 2008 as compared to 2007. Latin America managed to increase steel exports to China by 9% to 835,000 tonnes in 2008, but fourth quarter results by major South American producers such as Gerdau show dramatic market deterioration. Steel production in Chile, Colombia and Venezuela fell last year, and Brazilian ferroalloy exports dropped by 51% to USD 88.9 million in December compared to a year earlier.
Brazilian steel producers, including CSN and Usiminas, expect a slow return to demand, especially in flat steel used for appliances and vehicles, as the US economic stimulus plan begins to take effect. A small rise in new car sales in Brazil in January could signal steady domestic demand, while Brazilian government aid for carmakers and plans to promote infrastructure spending and homebuilding could lift the steel industry. Meanwhile, Brazilian brokerage Link Investimentos said that "We maintain our view that the outlook for the Brazilian economy is worsening and that the steel industry isn't very different."