Latin America's absorption of global steel excess capacity

Latin America is increasingly exposed to global steel excess capacity through both direct steel imports and steel embedded in manufactured goods. Between 2019 and 2025, total direct and indirect steel imports into the six major Latin American steel-producing economies (LAC6) increased by 47%, from 37.6 to 55.4 million metric tonnes, with indirect imports accounting for around 40% of the total. China is the dominant source, with combined direct and indirect imports more than doubling over the period, while ASEAN has also gained importance. Using conventional trade statistics alongside OECD Inter-Country Input-Output data, this paper traces the channels through which steel originating in excess-capacity economies reaches Latin American markets, including through downstream manufactured products and third economies. The analysis shows that China overwhelmingly dominates these flows, while third-economy transmission remains comparatively limited. Growing import penetration has contributed to persistently low-capacity utilisation, weakened intra-regional trade and increased competitive pressures on Latin American steel producers. The findings highlight how global excess capacity, driven largely by non-market policies and practices, is transmitted through increasingly complex value chains, underscoring the importance of addressing its root causes through strengthened international policy co-ordination and existing plurilateral frameworks.