As 2 Argentine steelmakers face problems, another one plans to invest US$300mn

While Argentine steelmakers Acindar and Tenaris are facing problems due to low local demand, competitor Sidersa is considering investing US$300mn in a new plant under the Rigi investment regime.

Acindar, a unit of ArcelorMittal, will again reduce operations at its main plant in Santa Fe province, as Tenaris also had to implement stoppages at its seamless steel tube factory in the province, putting pressure on the supply of inputs for the mining and hydrocarbons sectors.

"The situation is complicated. Imports of stainless steel rods and plates for trucks and harvesters are paralyzed. Acindar has even contacted some importers to tell them that they could offer its products at special prices to their clients so as not to lose business," a source from Stern Trading, requesting anonymity, told BNamericas.

After stopping the direct iron reduction area and the steel mill, Acindar will now suspend the rolling mills, which will then restart operations below capacity for 120 to 135 days, local media reported.

In March, the company suspended its Villa Constitución plant and three other factories, as demand from the construction, public works, energy and other sectors had fallen by "around 40% in the first months of the year," a company press release said.

Acindar plans to reduce crude steel production from 1.2Mt/y to 600,000t/y, although analysts expect an even lower volume.

ArcelorMittal's Q1 sales increased 12.6% quarter-on-quarter to US$3.1bn, mainly due to rising prices, but were offset in part by a 10.7% decline in steel shipments and low demand in Argentina, its quarterly report said.

Generally, "in April, 53% of companies registered falls in production, 60% in sales, 37% in exports and 24% in employment," business association Unión Industrial Argentina said in a report. 

Low local sales are aggravated by imports originating outside Latin America. In March, extra-regional imports represented 92.5% of total imports and 40% of apparent consumption, compared to 37% in February, regional steel association Alacero reported this month.

In a recent interview with BNamericas, Thais Terzian, steel analyst at consulting firm CRU, said that high interest rates, low investment, weak GDP growth and low industrial production present some additional challenges at the regional level.

However, during a local energy event in June, Tenaris' Southern Cone head, Javier Martínez, defended the government's proposed framework law and the Rigi investment regime that's part of it as necessary to clean up the Argentine economy.

The framework law of President Javier Milei's administration is currently being debated in the lower house.

Sidersa investment

Sidersa wants to take advantage of the Rigi regime, under which it plans to construct a 360,000t/y iron plant in San Nicolás city, Buenos Aires province, according to a government release.

The proposal considers US$100mn for the import of technologies and US$200mn for the production of inputs for the local and foreign markets.

In addition to creating 300 direct and 3,500 indirect jobs, the plant would operate with environmentally friendly technologies and sustainable solutions such as the integration of the steelmaking and rolling phases, scrap recycling and energy efficiency measures.