Unbalanced steel market again hitting Argentina's Acindar

Falling demand and increasing imports are battering Argentine steelmaker Acindar, forcing it to suspend 700 workers at its plant in Villa Constitución and raising concerns among hundreds of contractors and suppliers in the province of Santa Fe.

Part of the ArcelorMittal group, a leading global steel producer, Acindar has brought forward vacations and granted leave to a large part of the workforce due to the market collapse, local media reported.

The threat of layoffs is latent. "Acindar produces 1.2Mt/y but in 2024 we produced 600,000t. This is the worst year in history," Pablo González, general secretary of the metalworkers' union (UOM), said in an interview with local media.

The plant is operating at only 75% of capacity, as both the steel mill and the rolling mills have been shut down, González said.

Workers should return to work between January 7 and 13, but those dates could be pushed back since the market continues to be impacted by imports of Chinese and Brazilian steel, and the longed-for dynamism in the construction and public works sectors will not occur in the short term, the union representative added.

As a result, the outlook for Acindar in 2025 remains complex, considering the competition from steel produced by ArcelorMittal in Brazil, which is cheaper.

Tenaris, part of the Techint group, faces a similar situation with imports of steel from China and other countries, aggravated by the strengthening of the peso against the dollar as a result of the economic measures of the Javier Milei government.

The president of fellow Techint steelmaker Ternium, Martín Berardi, recently stressed this at a business event in Buenos Aires, where he warned that labor in Argentina is 60% more expensive than in Brazil. Brazil’s Usiminas is another steel company belonging to the Techint group that sells its products to Argentine clients.

Although exports of Argentine metallurgical products increased during 2024, imports continue to dominate trade. Between January and October, more than US$4bn were exported, while more than US$18bn were imported, according to a bulletin from Argentina’s association of metallurgical industrialists.

Nearshoring could present an opportunity for reindustrialization, Berardi said in a column, but improving competitiveness is still a pending issue in the sector. To do so, "a new tax framework is required that allows for growth again, eliminating distorting taxes such as on gross income, debits, bank loans and municipal rates," he said.

The Ternium executive called for a "strategy of intelligent opening to the world, negotiating agreements with the West."

However, González said the current situation at Acindar is even more serious than the suspension in March, when, in addition to Villa Constitución, three other factories of the company halted production in Argentina.

Weak consumption in the construction and public works sectors has been the trend this year. Francisco Stern, owner of steel products trading company Stern Trading in Argentina and a representative of Chinese, European and South American firms, spoke to BNamericas about the weak market.

"Acindar is selling 40,000t [a month] instead of 120,000t. The low sales are combined with the high market prices for all types of products and with a situation where many people stocked up on steel at a time of a huge gap between the official dollar rate and the parallel dollar, and so they bought commodities at half price as the only way out and now they sell them at ridiculous prices," said Stern.