Chile's largest steelmaker suspends production, blames China

Chile's largest steelmaker suspends production, blames China

The Chilean government described the Huachipato plant's decision as 'irresponsible'
The Chilean government described the Huachipato plant's decision as 'irresponsible'. Photo: GUILLERMO SALGADO / AFP
Source: AFP

Chile's largest steel plant announced on Wednesday that it had suspended operations because it could not sustain itself financially, despite new tariffs on Chinese steel meant to protect local production.

The Chilean government described the Huachipato plant's decision as "irresponsible," with at least 2,700 workers directly affected and as many as 20,000 jobs indirectly linked to the plant.

The company's board of directors said the decision to "indefinitely suspend" operations was made because it was impossible to competitively price its steel in the face of "the intensification of Chinese dumping," even with the tariffs in place.

The decision came after the finance ministry in April imposed temporary tariffs on Chinese imports of steel bars and balls of 24.9 percent and 33.5 percent respectively.

Both products are key inputs in copper production, in which Chile is the world leader.

Read also

Swiss mining giant Glencore drops plan to exit coal

"Almost four months after the measure was implemented, market behavior has made it impossible to correct the imbalances and to transfer these tariffs to the price," the company said in a statement.

Huachipato's board of directors concluded that the application of surcharges would not be enough to generate structural changes in the market to ensure the financial viability of the steel business in its current form.

The suspension of the steel company's activities will be gradual, with the process to be completed in September, the company said.

Huachipato, located in Talcahuano, about 310 miles (500 kilometers) south of Santiago, had earlier suspended operations in March, demanding the imposition of the new tariffs on Chinese steel to continue operations.

In the last two decades, China has increased its share of the world steel market from 15 percent to 54 percent, according to the Latin American Steel Association (Alacero).

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.