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Latin America Metal Works Sectors : A Company and Industry Analysis (August 2007)

  • ID: 656275
  • Report
  • August 2007
  • Region: America, America (exc North), Latin America
  • 28 pages
  • Mergent
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This report looks at the metal works industry in Latin America, with a focus on Brazil, Chile, Mexico, Peru and Venezuela
Current Environment - Key Points
- In 2006, prices of commodities including copper, aluminum, zinc and tin struck historically high levels, creating windfall profits for numerous companies and regions, including Latin America. - The elevated prices were largely the result of great demand, constrained supply and low inventories leading to very stiff market conditions and greater investor speculation in base metals
- After enjoying solid increases for the first half of this decade, Latin America faced its second successive year of waning raw steel production in 2006
- Steel companies- share prices rose strongly in the first part of 2007, with Brazilian companies leading the pack. - Shares of the region-s leading company, Gerdau Group, performed better than the indices of the stock markets on which these shares are traded. - ILAFA figures show that Argentina-s output rose 5.2% to 5.7 million tons, while production in Chile climbed 1.1% to 1.6 million tons. The single largest increase was in Ecuador, where production rose more than 69% to 140,000 tons

Industry Profile - Key Points
- Over the past 20 years, the steel sector in Latin America has seen dramatic modernization with the private industry adopting world best practices
- Unlike in the region-s other major commodities sector - oil and gas - 98% of steel company ownership is private
- The Latin American metals industry is very resource-intensive and spends heavily on new facilities and expansion to upgrade existing facilities
- Latin American countries have become known for frequent changes of government and rules and regulations tend to vary widely, depending on who is in power. Countries such as Venezuela and Bolivia have frequently changed policies - a feature which has deterred some foreign direct investment
Market Trends and Outlook - Key Points
- Chile is a world leader in the production of copper, with its market share set to grow further
- Consolidation of the global steel market is continuing at a fast pace, with Latin American steel producers growing largely through M&A, both within the region and worldwide
- Over the past two quarters, more suppliers have cited a lack of skilled workers as a key reason for not participating in metals sourcing projects
- The average worker remuneration in low to middle cost countries has been rising significantly over the past few years, with Latin America generally lagging behind. However, more and more strikes in Latin America over the past year have put the issue in the spotlight, with evidence that workers- pay is set to rise
- It is expected that this year will be another year of growth for the metals sector in Latin America. The International Monetary Fund (IMF) forecasts yet another strong year of world economic growth of 4.9%. In Latin America this is expected to generate continued high demand from large emerging economies including China, India and Brazil for raw materials

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Current Environment
- Sector Overview
- Sector Performance
- Leading Companies

Industry Profile
- Steel Production
- Steel Imports and Exports
- Sector Investment
- Policy and Regulatory

Environment
Market Trends and Outlook
- Copper Shines Brightly in

Latin America-s Future
- Larger Mergers Continue to

Change the Industry
- The Industry Struggles with a

Lack of Capacity
- Labor Costs Start to Rise

- Market Outlook
Country Profiles
- Brazil
- Chile
- Mexico
- Peru
- Venezuela
Currency Conversion Table
The Scope of this Report
Key References
Comparative Data

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