For three days, the steelworkers of Latin America came together to analyze the industry, which currently has good prospects but also rising costs. The next meeting will be at Cancún, Mexico.

Cartagena’s “Indias” Conference Center, Colombia, was the hub of ILAFA’s (The Steel and Iron Institute of Latin America) 48th Congress of Latin American Steelworkers. More than 800 delegates and renowned international specialists from various fields related to the steel industry met for three days. It was there that Daniel Novegil, Ternium’s CEO, analyzed the dynamics of the sector and highlighted its growth, with record-breaking worldwide volumes of 1,595 million tons in 2006 and the corresponding rise in consumption per capita.

He confirmed that price cycles are getting shorter, thanks to consolidation in the industry. “Although low in comparison to other industries, this phenomenon has achieved a greater number of solutions: quicker rates of cutting or raising production according to demand.” During the 80s, there were recessive cycles in 109 months; in the 90s in 75 months; and in recent years, this new dynamic in the industry has resulted in periods of loss in less than 30 months. This process of consolidation has also brought other advantages, for example, economies of scale; greater success in attracting capital and resources; more influence in negotiations; and a rise in profitability.

Daniel Novegil stressed that Latin America is a highly-efficient steel-producing region and the geographic area with the greatest consolidation in the world: 72% of raw steel production is concentrated among the top five producers, which include Ternium. “We have the resources, with access to raw material at low prices and a long industrial tradition…Our greatest challenge is to become a more powerful player,” he said in his presentation during the panel on the current status of the worldwide steel industry.

In the international context, he referred to the continuing rise in consumables (like iron ore, natural gas, etc.) and its effect on the costs structure of the steel industry. He highlighted the logistics chain as an area to analyze and keep under permanent observation.

Likewise, he detailed China’s impact on both the worldwide steel industry and that of Latin America. He predicted increases in Chinese steel-producing capacity which would far outstrip local demand. The Chinese exportation of goods containing steel to the detriment of the Latin American value chain was a long-term threat, he confirmed. “We must not watch ourselves become isolated from our value chain, it is imperative that our customers develop and grow – their success is our success,” he said, while alerting delegates to the increase in productivity in Chinese industry, putting metallurgical customers at risk with their exports. This proved that there was a need to strengthen the value chain in the region and to monitor the commercial activity of this world power. “We will win this battle by uniting with our customers,” he said.

Other representatives from Ternium, Martin Berardi (Argentina) and Régulo Salinas (Mexico), also participated in the conference. Berardi analyzed the concept of corporate social responsibility and outlined the various activities undertaken in this area by Ternium Siderar.

Salinas demonstrated the strategic value for Ternium of the value chain, both the internal one (Supply Chain) and the external one (consumables and customers, in particular SMEs). He explained the role carried out by the Supply Chain in balancing the needs of the commercial departments with those of production. At the same time, he spoke of the importance of SMEs to the Latin American economy and the impact and benefits of the ProSME program in supporting and boosting this type of company.