Declining commodity prices have deepened the trade deficit between Latin America and China, according to Alacero, the Latin American Steel Association.

As the price of steelmaking raw materials (iron ore, coal and scrap) took a nose dive in 2014, China benefited from the situation and acquired 7% more raw materials from foreign markets at a value 13% lower in dollar terms.

Latin American shipments to China grew by 5% but decreased by 16% in value terms. The region shipped 199Mt of iron ore to China in 2014, up 5% on the previous year and 86% originated in Brazil.

Conversely, shipments of coking coal from China to Latin America grew by 23% in volume terms and 5% in dollar terms when compared with 2013. Coke was the main steelmaking input shipped by China to the LATAM region in 2014 (907Mt, up 25% from 2013).

Where finished steel was concerned, China shipped 8.3Mt in 2014 – 56% more than in 2013 – while the LATAM region exported only 41.5kt to China, which was 3% lower than in the previous year.

Brazil was on the receiving end for most of China’s LATAM exports (2Mt) followed by Chile (1.25Mt) and Central America (1.17Mt). Mexico was the fourth most important destination (790kt).

Flat products accounted for 67% of finished steel arriving in Latin America from China (5.5Mt) while long products totalled 2.2Mt, a growth of 79% compared with 2013. Other products included other alloyed steel sheets and coils (2.16Mt), wire rod (1.18Mt) and hot dip galvanised (1.11Mt).

Latin America increased shipments of seamless pipes to China by 106% despite the small volume of 18kt. However, it received 499kt of the same product from China.

Where indirect imports were concerned, the Chinese shipped 6.1Mt to Latin America but imported just 106kt from Latin America (a 13% increase over 2013).

The most popular indirect steel import into Latin America was the automobile, which contained 844kt of steel and accounted for 14% of total inflow. Other metal items amounted to 808kt while manual machines totalled 783kt.

“Raw materials trade between China and Latin America showed a surplus for the latter in 2014. However, this surplus is declining every year and is not sufficient to offset the deficit in finished steel and indirect trade products,” said Alacero.