Chile politicians clamor to save local steel from cheap Chinese imports

Chilean politicians are clamoring to convince the country’s only steelmaker to overturn a decision to shutter operations due to an influx of cheap Chinese alloy, testing the nation’s free-trade resolve.

On Tuesday, the lower house of Congress passed eight resolutions designed to urge President Gabriel Boric to defend the loss-making steel industry. This week, Economy Minister Nicolas Grau told a Senate committee that it wasn’t too late to seek stricter anti-dumping measures. He also reiterated a call for mining companies not to be “indifferent” to the steel-making crisis. 

The debate follows Cap SA’s announcement last month to wind down its mills, deciding that new anti-dumping measures were insufficient. 

While Chile accounts for a tiny fraction of a global steel industry that’s dominated by China, the case is putting the Boric administration’s priorities to the test. On one hand, raising tariffs to the 25% levels of North America and Europe would help keep the mills running, safeguarding 20,000 jobs. On the other, it would counter a free-trade strategy that’s helped Chile prosper in relative terms, as well as risking the ire of top trading partner China.

The dilemma is shared by other steel producers in the region such as Brazil and Colombia amid an up-tick of cheap imports due to slower domestic demand in China and years of prohibitive trade tariffs elsewhere. 

To be sure, steel-making is a small part of the region’s economies. But it’s considered strategic, given the alloy is essential for infrastructure and manufacturing.

The predicament was exemplified by a protesting steel worker this week: “To President Boric, you have a commitment to the Chilean people, not to the Chinese,” Jorge Gonzalez told Radio Bio Bio.