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THE IMPACT OF CHINAS GLOBAL ECONOMIC EXPANSION ON LATINAMERICA

WORKING PAPER No. 10

Economic Relations between Brazil and China in the Mining/Steel Sectors

Alexandre Barbosa and Dbora Miura Guimares

PROSPECTIVA: Consultoria Brazileira de Assuntos Internacionais

March 2009


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Acronyms

ALADI Latin American Integration AssociationCIF cost, insurance and freightCNAE Brazilian Classification of Economic Activities

DNPM National Department of Mineral Production BrazilFOB freight on boardHS Harmonized SystemIISI International Iron and Steel Institute (now the World Steel Association)MDIC Ministry of Industry, Commerce and Foreign TradeNCM Mercosurs Common Nomenclaturenes not elsewhere specifiednesoi not elsewhere specified or included


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Introduction

This study is intended to complement the more general analysis of the economicrelations between Brazil and China through a sectoral approach. In the first part, wepresent the methodology used. In Part 2, we give a general overview of the productionsectors of both countries, emphasizing their historic context, development of the steel

industry and how their productive structure functions. In Part 3 the dynamics of tradeand investment are analyzed, taking into account the regional context and the mainconsumer markets of the mining/steel sector, and then highlighting the main trends inthe medium term.

1. Methodological introduction

This study aims to identify the impacts that Chinese expansion is exerting upon Brazil,whether in terms of bilateral trade flows between these two countries or in terms ofdisplacement of Brazils trade with other countries in the region. It is based on the

assumption that this trade dynamic tends to influence investment decisions as well asthe evolution and profile of production in Brazil.

Sectoral trade data are covered in Chapters 26, 72 and 73 of Mercosurs CommonNomenclature (NCM) with regard to the iron and steel industries. The tariff profile,trade barriers and investment flows between China and Brazil were also analyzed.

The Latin American countries analyzed in this sectoral study in order to ascertainwhether or not Brazilian exports in the region have been reduced as a result of increasedChinese imports were those that make up the Latin American Integration Association(ALADI), comprising Argentina, Brazil, Bolivia, Chile, Colombia, Cuba, Ecuador,Mexico, Paraguay, Peru, Uruguay and Venezuela.

Initially, the statistics on bilateral trade between Brazil and China from theaforementioned chapters were organized in order to measure the evolution of exports,imports and trade balances of specified sectors, and subsequently identify the mostrelevant NCM codes and positions in the trade agenda of both countries. The timeperiod covered for exports and imports was from 1998 to 2007.

Brazilian and Chinese trade flows to the United States and the European Union werealso considered in order to check evidence of trade diversion and to complement thebilateral trade mapping.

Based on the mapping of the main NCM codes and positions that Brazil exports andimports from China, in the next stage we sought to identify the Chinese products thatare competing directly with Brazilian products, both on the domestic market and in theLatin American markets, in which Brazil has a considerable market share.

Using this method of organizing trade data, three major patterns of trade flow behaviorwere identified: 1) growth of Chinese exports and Brazilian exports to the ALADIcountries; 2) growth of Chinese exports and decrease of Brazilian exports to the ALADIcountries (Tables 1); and 3) growth of Chinese exports to ALADI countries and toBrazil with marginal presence of Brazilian exports to the ALADI countries.


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Table 1Patterns of trade flow behavior

China and Brazil in relation to ALADI

Sector Position Description Pattern

7202 Ferroalloys ++

7318 Screws, bolts, nuts, washers etc, iron or steel ++

7323 Household articles and parts, iron and steel etc ++

7208Flat-rolled products of iron or non-alloy steel of a width of 600mm or more, hot-rolled, not clad, plated or coated. +-

7209

Flat-rolled products of iron or non-alloy steel of a width of 600mm or more, cold-rolled (cold-reduced), not clad, plated orcoated. +-

7304Tubes, pipes and hollow profiles, seamless, of iron (other thancast iron) or steel. +-

7308 Structures and parts thereof, of iron or steel +-

Iron and steel

7315 Chain and parts, of iron or steel +-

++: Growth of Chinese exports/growth of Brazilian exports

+-: Growth of Chinese exports/decrease in Brazilian exports+: Growth of Chinese exports/marginal Brazilian exports

2. An overview of the Brazilian and Chinese steel and iron industries

2.1 World mining/steel production and trade

According to UNCTADs publicationIron Ore Market 2007-2009, world production ofiron ore grew by 9% in 2007, reaching 1.6 billion tons. The global output increasedmainly in the four major producing countries Brazil, China, Australia, and India.

Table 2: Iron Ore Reserves and Production by Country, 2007

Reserves Production

2007Countries

Billion t (e) % Million t (e) %

Brazil 33,233 9.8% 354,674 22.0%

South Africa 2,300 0.7% 40,000 2.5%

Australia 45,000 13.2% 320,000 16.8%

Canada 3,900 1.1% 33,000 1.7%

China 46,000 13.5% 600,000 31.6%

United States 15,000 4.4% 52,000 2.7%

India 9,800 2.9% 160,000 8.4%

Russia 56,000 16.5% 110,000 5.8%Ukraine 68,000 20.0% 78,000 4.1%

Other 60,767 17.9% 154,326 8.1%

Total 340,000 100.0% 1,600,000 100.0%

Source: National Department of Mineral Production Brazil (DNPM); Mineral CommoditySummaries (USGS) 2008; United Nations Conference on Trade and Development(UNCTAD)Note: (e) Estimated data, except for Brazil and World total figures.

The worlds reserves of iron ore account for 340 billion tons, highlighting Ukraine(20% of reserves), Russia (16.5%), China (13.5%), Australia (13.2%) and Brazil(9.8%).

The global trade flows also present increasing figures. World exports of iron oreincreased 8.1% in 2007 (6.1% in 2006). Brazil is the largest exporter (269 million tons),


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overtaking Australia. China remains the most important importer, accounting for 41%or 383 million tons of world iron ore imports in 2007.

World production of crude steel in 20071 reached 1.34 billion tons, a growth of 7.5%compared to the previous year. China was the largest world producer, with 35.5% of theworld total. The most significant expansion of production capacity occurred in China,

with an annual average growth of 10% between 2002 and 2007. In same period worldproduction excluding China rose by 2.8% a year.

Source: World Steel Association, (formerly IISI)

Source: World Steel Association, (formerly IISI)

Brazilian crude steel production reached 33.8 million tons in 2007, an increase of 9.4%over the previous year. Brazil was ranked 9th in the world, accounting for 2.5% ofworld production.

Thanks to the privatization of the steel industry around the world, a series of mergersand acquisitions have resulted in the consolidation of the main players in the world steelindustry in the last decade. In this context, steel companies are streamlining theirproduction and logistics, with the geographical displacement of crude steel production2.The business logic of the largest companies indicates that production of pig iron andsemi-finished products 3 should be located near to raw material suppliers while the

1 International Iron and Steel Institute data2 Para onde vai a China? O impacto do crescimento chins na siderurgia brasileira. BNDES Setorial, Rio

de Janeiro, 2005.3 This is regarded as the hot part of the production because it involves the chemical process within thesteel production (reduction, refining and ingot casting).

0200

400600800

1000120014001600

1998199920002001200220032004200520062007

106ton

Figure 1

World crude steel production

0

100200300400500600

2002 2003 2004 2005 2006 2007CHINA EU JAPANC.E.I. BRAZIL

Figure 2

World crude steel production

106ton

Figure 3: Market share of the main steel producers in 2007

35.5%

15.2%8.7%9.0%

7.1%

2.5%

22.1%

CHINA EU JAPAN C.E.I.USA BRAZIL OTHER


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production of cold-rolled steel (high added value products) should be in the consumermarkets.

Compliance with environmental agreements is forcing developed countries to closedown inefficient and polluting steel companies, directing the hot part of production tocountries that are not committed to reducing emissions of greenhouse gases, such as

Brazil and China.

2.2 Iron and steel production chain

The steel industry is an important supplier of raw materials for industrial products andthe construction sector. It is made up of large companies operating in the differentstages of the production process, from processing iron ore into pig iron to theproduction of semi-finished and rolled products. The main raw materials used by steelindustry are iron ore and coal. Within the steel production chain, the main products areclassified into flat, long and semi-finished, as outlined in Figure 4.

Figure 4: The Iron and Steel Production Chain

Source: Prospectiva Consultoria

Note: The classification of the products of the iron ore and steel chain are based on the correspondencebetween two classification systems: the Harmonized System (HS), used for international trade, and theBrazilian Classification of Economic Activities (CNAE).

2.3 The Brazilian iron ore market

In 2007, Brazilian production accounted for 22% (354.7 million tons) of worldproduction. Minas Gerais (72%) and Par (26%) states were the main producers.

The rate of growth of production was very low until 2002 (around 2% a year). Since2003, propelled by strong international demand, especially from China, the productiongrowth rate reached 13.45% a year in 2007.


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Source: DNPM

Brazilian domestic consumption is concentrated on pellets and pig iron products that inthe mining/steel chain are classified as raw materials. In 2007, domestic consumption ofiron ore was of around 119.1 million tons (an increase of 9.2% compared to theprevious year)4.

The market structure of the mining sector is extremely concentrated. In Brazil,production by Vale and its joint-venture partners amounted to 308.4 million tons(around 90% of the domestic production) in 2007.

In terms of Brazilian foreign trade, iron ore and pellet exports reached 269.5 million

tons (US$ 10.6 billion) in 2007 and the average price was US$ 39.18/t. Compared to2006, exports increased 11.1% in volume and 18.0% in value. China remains the maindestiny of Brazilian exports (in US dollars), accounting for 35% of Brazilian iron oreexports. Other export destinations were Japan (11%), Germany (9%), Italy and France(5%) and South Korea (3%).

Table 3Brazilian exports of iron ore, 2007 (2601 HS position)

Countries US$ M T % value

China 3,710 105,025,713 35%

Japan 1,213 31,217,225 11%

Germany 927 24,281,183 9%Italy 526 11,366,262 5%

France 484 13,229,359 5%

South Korea 365 10,321,006 3%

Others 3,333 74,007,284 32%

Total World 10,558 269,448,032 100%

Source: COMTRADE/UN

Taxes in the mining sector

Unlike India and China, Brazil does not tax exports of iron ore. On the contrary, thereare government incentives for iron ore exports. In Brazil, mining companies are

4 Data from National Department of Mineral Production (DNPM).

Figure 5

Brazilian iron ore production

194210 212

234262 281

318

355

213

198

0

50

100

150

200

250

300

350

400

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

10Mt


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exempted from paying the ICMS contribution (Tax on Circulation of Goods andServices collected by state governments) when the product is exported.

2.4 Brazils steel industry

Brazil invested in the steel industry to supply the demand of domestic industries.However, over time low levels of domestic consumption led to surplus production beingchanneled to foreign markets.

During the period of privatization (1994 to 2004), the steel companies invested US$ 13billion, prioritizing the modernization and technological updating of the mills. In 1999,the Brazilian steel output was 25 million tons per year. In 2007, it reached 32.9 milliontons.5

Currently, the sector comprises the following companies: Acesita, Aos Villares,Companhia Siderrgica Belgo Mineira, Companhia Siderrgica Nacional (CSN),Companhia Siderrgica de Tubaro (CST), Gerdau Aominas, Siderrgica Barra

Mansa, Usiminas/Cosipa, VandM do Brasil and Villares Metals.

The Brazilian steel industry produces a wide range of semi-finished and finished steelproducts; however its foreign trade profile concentrates mainly on semi-finishedproducts (the most dynamic segment in the international trade of steel) because of thelower incidence of trade barriers (see Section 3).

Projected investments are expected to make Brazils production capacity jump from 33million to 59 million tons of steel between 2007 and 2012. Foreign producing groupsare evaluating the possibility of investing in the construction of new mills in Brazil,mostly in the north and in the northeast, aimed at exporting semi-finished goods.

5 Data from Brazilian Steel Institute


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2.5 The Chinese iron ore marketSince 1990 Chinese demand for metal has grown by an average of 10% a year. 6Increasing iron ore import figures indicate that the exploration and expansion ofexisting mines in Chinese territory has not been enough to counterbalance demandgrowth and the depletion of natural resources.

Source: Comtrade/UN

Moreover, though Chinese iron ore production has been growing (see Table 2), itsquality is low, requiring mineral resources from Brazil and Australia, the two largest

6 Figures from Raw Material Group (RMG).

Box 1: Position of the Brazilian steel industry on the entry of Chinese products

Since China is restructuring its plants and its production of steel expanded by 223% between 2001and 2007, the world steel industry is following each movement made by Beijing.

For Brazil, the increase in Chinese steel exports is of concern mainly because Brazilian steel exports

are being displaced in third markets. Statistics for Brazilian steel exports to its major markets (theUnited States, European Union and Latin America) already indicate this trend.

However, compared to Brazil China is still at a disadvantage because its cost of production isrelatively higher, considering that the manufacturers are close to the Brazilian iron ore. Takingadvantage of the low cost of steel production in order to gain scale and competitiveness, Braziliancompanies are forming joint ventures with foreign companies to compete with China (ValorEconmico, 2006a).

Moreover, the Brazilian steel industry, together with the government, is looking for measures toprevent future losses caused by the continued growth of Chinese steel exports. In 2007, IBS (theBrazilian Steel Institute) suggested the participation of Brazil as the third part in the discussionsopened by the United States and Mexico in the WTO. The two countries claimed that China issubsidizing its steel exports. Currently (February 2 2009) the matter is still in the process of

consultations at the WTO and the Brazilian government is watching and studying the case.

Another defence mechanism used is the application of import quotas. The European Union and theUnited States are negotiating unilateral quotas for Chinese steel imports. Neither are satisfied withthe increase of Chinese exports, claiming that the products contain subsidies.

As a result, the Chinese government has recently made moves to contain exports of steel. It hasincreased the tariff on exports of semi-finished steel and finished products from 10% to 15% andreduced export credit. The government has also created a licensing system for exports. (ValorEconmico, 2007a)

Figure 6

Chinas total trade balance (2601 HS position: iron ore)

-500

-400

-300

-200-100

0

1998

1999

2000

2001 2002 20032004

20052006

2007

Milliont


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suppliers. Consequently, Chinese authorities are concerned that this ratio will fall evenfurther, curbing economic growth. In order to avoid this situation, Chinese policy hasfocused on two strategic actions: a) investing in joint ventures overseas and b)ensuringlong-term contracts at set price levels.

Unlike the Brazilian market,7 the Chinese mining sector is extremely fragmented, both

in terms of the number of mines and of mining companies. At the end of 2006, therewere over 8,000 iron ore mines in total. In the official statistics, 3,867 are mentioned, ofwhich there are 34 large mines, 43 medium, 1,407 small and 2,383 very smalloperations. The large mines account for 45% of total production, the medium, 11%,small mines 17% and very small operations 27%.8

2.6 Chinas steel industry

The growing demand for steel in China is a result of investments in infrastructureneeded to modernize the country. In order to meet this demand, in 2005 China

announced the governments Development Policy for the Steel Industry, whose maintargets were to restructure the Chinese steel sector, improving the efficiency andcompetitiveness of their companies.

Following the world trend, Chinese government policy has focused on the consolidationof the fragmented steel industry. This movement of mergers and acquisitions in Chinahas been very rapid. In 2004, there were only two major steel companies: Baosteel andAnshan Steel, producing over 10 million tons per year. In 2005, the group of companiesof the same size totalled ten. National policies seek to establish two groups ofcompanies by 2010, each with capacity of producing around 30 million tons a year.9

Table 4Chinas crude steel consumption

2001-2007

Million tons 2001 2002 2003 2004 2005 2006 2007Consumption 169.77 205.73 258.58 296.58 355.57 388.26 434.36Production 151.03 182.25 222.34 282.91 355.79 422.99 489.24Net Imports 18.74 23.48 36.24 13.67 -0.22 -34.73 -54.88

Source: China Iron and Steel Association

Table 5

Evolution of steel consumption and production2001-2007

Base Year 100 = 2001 2001 2002 2003 2004 2005 2006 2007Consumption 100.00 121.18 152.31 174.70 209.44 228.70 255.85Production 100.00 120.67 147.22 187.32 235.58 280.07 323.94

Source: China Iron and Steel Association

7 The production of Vale and its joint-venture partners totaled 308,4 million tons (around 90% of

domestic production).8 Commodities Now LME Week Supplement(26/9/2006)9 Commodities Now LME Week Supplement(26/9/2006)


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In terms of the structure of production, the Chinese industry is largely linked to longsteel products, particularly because of initial demand for industrial construction, civilaviation and the lower complexity of production of this kind of product.10

Since 2003 flat steel products (which were the main products imported) have receivedinvestment to increase production to meet demand. Such investment resulted in an

increase of production capacity and import substitution in 2004.

Source: Comtrade/UN

3. The Dynamics of Trade and Investment

3.1 Bilateral trade and its impacts on the region

Sales of Brazilian iron ore to China increased nearly twentyfold between 1998 and2007, reaching US$ 3.7 billion in 1998. 11 Since the quantity of exported goods

increased around tenfold, it was observed that the price effect to which China itselfhas decisively contributed accounted for half of the increase in sales in dollars duringthe period.

10 Para onde vai a China? O impacto do crescimento chins na siderurgia brasileira. BNDES Setorial,Rio de Janeiro, 2005.11

Although Chapter 26 covers all types of ore, in the case of exports to China, the NCMs 2601100 (Non-agglomerate iron ore pellets and concentrates thereof) and 26011200 (Agglomerate iron ore pellets andconcentrates thereof) account for 97% of the total sales of that chapter.

-30

-20-10

01020304050

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

US$bn

Exports Imports Trade Balance

Figure 7Chinas total trade balance. Chapter 72: Iron and steel

-60

-40-20

020406080

1998 1999 2000 2001 2002 2003 2004 20052006 2007

Milliont

Exports Imports Trade Balance

Figure 8Chinas total trade balance. Chapter 72: Iron and steel


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Source: Aliceweb, Ministry of Industry, Commerce and Foreign Trade (MDIC)

Source: Aliceweb, MDIC

In terms of participation on the Chinese market, Brazil appears as the second largestsupplier of ore, after Australia. After gaining market share between 1998 and 2002 and despite the significant expansion in exports between 2002 and 2007 Brazil hassuffered a reduction of its share in overall Chinese ore imports in recent years, reachingthe figure of 18% last year. India was outstanding because of a more pronouncedincrease in ore exports than Brazil, elevating its position on the Chinese market, alreadycoming in at 16.3% in 2007.

-

0.50

1.00

1.50

2.00

2.503.00

3.50

4.00

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

US$bn

0

20

40

60

80

100

120

Kgbn

US$ Kg

Figure 9Brazilian exports to ChinaIron ore (2601 HS position)

Figure 10

Brazilian exports to ChinaIron ore: 2601 HS position (year base 100 = 1998)

387.41

947.31

1906.82

998.74

501.13

328.55

0

200

400600

800

1000

1200

1400

1600

1800

2000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

0

200

400

600

800

1000

1200

US$ Kg


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Source: Comtrade/UN

When considering the Brazilian share for position 2601, which is where the productsexported by Brazil to China are concentrated, the Brazilian share is even greater, fromaround 20% in 1998 to 28.1% in 2007 (Table 7). In the same period, Australia andSouth Africa have seen their market share fall while India increased its market share,reaching 23.18% in 2007.

Table 7Brazilian share in Chinese imports for position 2601

1998 2002 2007

Country US$million Share Country US$million Share Country US$Million ShareAustralia 686.90 46.80% Australia 994.92 35.93% Australia 11,106.46 32.86%

Brazil 281.60 19.19% Brazil 801.78 28.96% Brazil 9,491.22 28.08%

India 187.16 12.75% India 557.33 20.13% India 7,834.90 23.18%

South Africa 151.41 10.32% South Africa 241.89 8.74% South Africa 1,015.08 3.00%

Peru 96.51 6.58% Peru 58.04 2.10% Canada 680.90 2.01%

Canada 23.80 1.62% Chile 37.66 1.36% Russia 569.55 1.69%

Kazakhstan 16.23 1.11% Canada 28.43 1.03% Iran 497.91 1.47%

Sweden 7.57 0.52% Kazakhstan 15.84 0.57% Peru 384.02 1.14%

New Zealand 5.17 0.35% Venezuela 6.21 0.22% Venezuela 370.63 1.10%Venezuela 3.92 0.27% Saudi Arabia 5.75 0.21% Indonesia 285.22 0.84%

Others 7.49 0.51% Others 21.21 0.77% Others 1,560.90 4.62%TOTAL-

World 1,467.76 100.00%TOTAL-

World 2,769.07 100.00%TOTAL-

World 33,797 100.00%

Source: Comtrade/UN

12 This figure is far higher than the $3.8 billion quoted on the previous page. There are different reasonswhy the reported exports of one country may not coincide with the reported imports of its partner country(imports are CIF and exports are FOB; time lag between exports and imports; goods going via thirdcountries; goods being classified differently etc). However, it may be that some of Brazils exports aregoing to China through a third country, where China is properly recording them as imported from Brazil.Imports through Hong Kong and other Chinese territories may also distort data.13

The main product exported by India to China within Chapter 26 also includes position 2601 (iron oresand concentrates), which explains the increase in the market share from 2002 to 2007, competing with theBrazilian product.

Table 6

Brazilian share in Chinese imports for Chapter 26

1998 2002 2007

CountryUS$

thousandShare Country

US$thousand

Share Country US$ thousand Share

Australia 867,615 37.91% Australia 1,261,668 29.47% Australia 13,943,018 25.80%

Brazil 289,192 12.63% Brazil 816,151 19.07% Brazil 9,661,97912 17.88%

India 228,567 9.99% India 626,102 14.63% India13 8,794,765 16.27%

South Africa 177,509 7.76% South Africa 286,050 6.68% Chile 3,367,901 6.23%

Chile 148,726 6.50% Chile 237,367 5.55% Peru 3,062,270 5.67%

Mongolia 122,697 5.36% Peru 236,505 5.52% Indonesia 2,085,449 3.86%

Peru 122,465 5.35% Mongolia 178,354 4.17% South Africa 1,925,932 3.56%

Canada 64,53 2.82% Canada 89,239 2.08% Mongolia 1,130,671 2.09%

Gabon 35,564 1.55% Iran 69,745 1.63%UnitedStates

1,067,928 1.98%

Iran 24,073 1.05% Indonesia 66,245 1.55% Canada 1,031,560 1.91%

Others 20,879 9.08% Others 413,293 9.65% Others 7,978,447 14.76%

TOTAL-World 2,288,818 100.00%

TOTAL-World 4,280,721 100.00%

TOTAL-World 54,049,920 100.00%


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Seeking to follow the evolution of trade relations between Brazil and China in Chapters72 and 73 of the steel value chain, as well as the impacts on transactions with ALADIpartners, an initial observation refers to Chapter 72 which is at a more advanced placein the chain in relation to Chapter 26, but with lower added value than Chapter 73.

There was a significant rise in Brazilian exports of Chapter 72 goods to China, whichreached its peak in 2003 at just under US$ 800M, only to experience a sharp drop in theyears 2004 and 2006.


In parallel, China became an exporter of semi-finished and finished iron and steel toBrazil since 2004 within this chapter, reaching a sales flow of $400M in 2007, when theBrazilian trade surplus for this chapter was practically zero. The drop in Brazilianexports to China coincides with the increase in Chinese steel production since 2004.Brazil was exporting high added value products (semi-finished products and flat steel)and returned to providing raw material for Chinese steel production (ferro-alloy and pigiron).


0

100

200

300

400

500

600

700

800

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

US$

M

Export Import Trade Balance

Figure 11Trade flow BrazilChina (Chapter 72: Iron & steel)

Figure 12

Trade balance BrazilChina (Chapter 72: Iron and steel)

-400

-200

0

200

400

600

800

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

US$M

Pig iron Ferro-alloys Semi-finished products

Flat products Long products Others


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Note: Pig iron (7201 and 7203 HS-positions); Ferro-alloys (7202 HS-position); Semi-finishedproducts (7204; 7206 to 7208; 7218 and 7224 HS-products); Flat products (7208 to 7210; 7219;7220; 7225 and 7226 HS-positions); Long products (7211 to 7217; 7221 to 7223; 7227 and 7229 HS-positions); Others (7205 HS-position)

An evaluation of the exports of the NCMs classified in Chapter 72 for which Brazil

stands out in supplying the Chinese market shows that only in two of these have NCMsales continued to rise, still driven by the price factor, while in the other NCMs, Chinahas started to rely on domestic supply or on imports coming from other countries. Thetwo cases in question are precisely the products at the top of the value chain, namelycrude non-alloy cast iron and ferro-niobium.


Two conclusions can be outlined and are evidenced in the tables below. In the first

place, while Brazil has reached a position of prominence in Chapter 72 products withless value added (accounting for almost 50% of Chinese imports for position 7201,surpassing Russia during the period 2003 to 2007), in other positions Brazil isincreasingly marginal, which can be explained in part by the expansion of the Chinesesteel industry (see the section above on Chinas steel industry).

Table 8

Brazilian share of Chinese imports of key positions in Chapter 72

Iron and steel products Position 2003 2004 2005 2006 2007

Pig iron 720114

9.52% 32.91% 44.64% 51.41% 48.90%Ferro-alloys 720215 16.10% 4.96% 11.85% 10.06% 7.50%

Semi-finished products 720716 18.81% 13.26% 19.02% 0.00% 1.10%

720817 2.65% 3.35% 1.26% 1.14% 0.80%Flat steel products

720918 3.95% 3.71% 3.51% 2.45% 0.20%

Source: Comtrade/UN

14 Pig iron, spiegeleisen in pigs, blocks or other forms15 Ferro-alloys16 Semi-finished products of iron or non-alloy steel17 Flat rolled products of iron or non-alloy steel, of a width of 600 mm or more, hot-rolled, not clad,

plated or coated18 Flat rolled products of iron or non-alloy steel, of a width of 600 mm or more, cold-rolled (cold-reduced), not clad, plated or coated

US$ Million

72011000 72029300 72071200 72083990 72091700

Figure 13

Brazilian exports to ChinaMain products: Chapter 72: Iron and steel

-

50

100150

200

250

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007


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Further evidence comes from the types of products most widely sold to Brazil by China:these are concentrated in Chapters 7208 and 7209 (Tables 9, 10, 11 and 12), where thelaminated (rolled) iron and steel products are grouped. About half of all Brazilianimports from China are found this chapter.

Although it is still early to indicate a shift in Brazilian exports of iron and steellaminates to the Latin American markets, in the countries highlighted in the tables anexpansion of Chinese exports can be seen, as well as a drop or smoothing in Brazilianexports, especially as of 2006. In a period of just four years, total Chinese exports to theALADI countries (excluding Brazil) under NCMs 7208 and 7209 went from almostzero to nearly the same level as Brazilian exports to the region in both cases. Thedistance is even greater when the MERCOSUR countries are excluded from theanalysis.

It is also worth mentioning that the ALADI Nine countries (including Brazil) nowrepresent 6.8% of total Chinese exports for position 7209, while this same group of

countries accounts for more than half of Brazilian exports. This trend is repeated inChapter 73 as we will see indicating that the differences in terms of scale ofproduction, along with a set of macroeconomic factors, give China a major competitivedifferential, particularly in the sectors with higher value added.

In parallel, Brazilian exports of these products to ALADI countries are more importantfor maintaining the productive performance of the Brazilian steel industry than they arefor the Chinese case, where ALADIs share, although growing, is still relatively low.

Table 9Main positions exported from China to Brazil and other ALADI countries

Chinese exports to ALADI countries

Position 7208 Flat-roll iron and non-alloy steel n/un600mm wd hot-rolled, not cladYear 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$Argentina 0 0 32,977 0 9,181,607Brazil 0 0 0 19,257,762 117,686,700Chile 0 208 0 25,757,616 46,723,989Colombia 0 0 907,627 7,118,077 27,103,663Cuba 0 574,277 6,474,297 1,144,281 5,418,589Ecuador 0 0 0 13,908,123 16,169,752Mexico 0 27,061,864 22,531,276 90,086,855 12,353,011Paraguay 0 0 0 0 139,984Peru 0 0 4,109 52,305,935 38,208,501Venezuela 0 0 0 1,788,321 45,613,492Total ALADI - 27,636,349 29,950,286 211,366,970 318,599,288

World 341,088,811 1,931,651,440 2,989,825,075 6,019,026,227 9,785,149,139% ALADI 0% 1.43% 1.00% 3.5% 3.26%

Source: Comtrade/UN

Table 10Chinese exports to ALADI countries

Position 7209 Flat-roll iron and non-allo steel n/un600mm wd cold-rolled, not cladYear: 2003 2004 2005 2006 2007

Country US$ US$ US$ US$ US$

Argentina 0 0 0 0 3,896

Brazil 0 0 14,167 899,829 35,614,014

Chile 0 0 0 1,601,917 2,264,754

Colombia 0 0 0 379,405 222,646

Cuba 162,136 1,101,004 1,035,395 265,376 582,956

Ecuador 0 0 0 4,729,040 1,877,957


17/40


18/40

18

Source: Comtrade/UN

Source: Comtrade/UN

Secondly, Brazil has also been displaced from the Chinese market in the segments ofhigher added value in Chapter 72, such as positions 7208 and 7209, losing ground to theleaders (Japan and South Korea), as well as other to Asian countries and Russia.

Source: Comtrade/UN

Figure 16 indicates the evolution of Chinese imports between 2003 and 2007, accordingto the level of value added in the steel industry. The figure shows the decline in Chineseimports of products of higher value added in the steel productive chain (position 7208)

Figure 14

Brazilian and Chinese exports to ALADI(excl. Brazil): Position 7208

-

100

200

300

400

500

600

2003 2004 2005 2006 2007

US$M

China Brazil

Figure 16World Chinese imports

77 240

1,497

3,583

9.52%

48.95%

15.48%

60.38%

0

1000

2000

3000

4000

2003 2007

US$

M

0%10%20%30%40%50%60%70%

7201 7208 % - Brazil

Figure 15

Brazilian and Chinese exports to ALADI

(excl. Brazil): Position 7209

-

10

20

30

40

50

60

2003 2004 2005 2006 2007

US$M

China Brazil


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19

during this period, which reflects the expansion of domestic production of rolled ironand steel products. Furthermore, as already mentioned, a trend of regionalization ofsuppliers can be seen in this type of product, in which Japan tops the list of mainsuppliers in 2007 with a 60.38% share of Chinese imports.

At the same time, the expansion of Brazilian exports of products with lower value added

(position 7201, pig iron) has benefited from the increasing Chinese imports of theseproducts. In other words, China tends to manage the supply chain of steel, externalizingthe links with lower added value and maintaining the most advanced segments of thechain through domestic production and decreasing foreign supply, based on fewercountries with a high level of competitiveness and product quality.

With regard to competition in the supply of iron ore and manufactured products fromLatin American countries, this is marginal; Mexico and Venezuela are Brazils maincompetitors in the supply of semi-manufactured products (position 7207), and Mexicoand Argentina are the main competitors in rolled steel and iron products (position7209).19

In the case of Chapter 73, these trends towards primarization of Brazilian exports toChina appear even more strongly. Here the volumes exported are practically nil, whileimports of iron and steel articles from China are on the rise. In 2007, Brazilian importsfrom China, under this chapter, reached the US$ 300M mark, having risen from a valueclose to zero in 1998. We stress, however, that this represents only18% of Brazilianimports for this chapter.


19 For further details see Annex I.

Figure 17Trade flow BrazilChina

Chapter 73: Articles of iron & steel

-400

-300

-200

-100

0

100

200

300400

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007US$M

Export Import Trade Balance


20/40

20

Source: Aliceweb, MDIC 20

Even though Brazil does not export higher value-added goods to China in the steelproductive chain, nothing prevents this from happening when the destinations are theALADI countries. In fact, Brazil stands out as a major regional exporter of higher value-added products in the steel chain, including several positions where an increase inimports from China has been observed.

Figure 19 shows several important findings, some of which have already been pointedout for Chapter 72 but which appear here in a more obvious manner. First, Brazil hasbeen overtaken by China in three of the five 4-digit positions analyzed (7304, 7308 and7318) in terms of total exports to ALADI countries during the 2003-2007 period.

In the other two (7315 and 7323) China has increased its lead over Brazil in the LatinAmerican market. It is also worth mentioning that China had already overtaken Brazilin the value of exports to Argentina in at least three positions (7304, 7315 and 7323) by2007.

Another noteworthy factor is that while Chinese exports to ALADI countries representbetween 2% and 10% of total worldwide sales of these positions by China, BrazilianChapter 73 exports tend to be increasingly dependent on the Latin American market,whose importance varies from 20% to 70%, with the exception of position 7308 (seeAnnex I).

20 73043990: Tubes, pipes and hollow profiles (excl. of 7304.10-7304.31), seamless, of circular crosssection, of iron (excl. cast iron)/non-alloy steel)73089090: Structures (excld. prefabricated buildings of heading 94.06) and parts of structures (eg. bridgesand bridge-sections, lock-gates, towers, lattice masts, roofs, roofing frameworks, doors and windows andtheir frames and thresholds for doors, shutters, balustrades, pillars and columns) of iron/steel (excl. of7308.10-7308.40); plates, rods, angles, shapes, sections,tubes and the like, prepared for use in structures,of iron/steel73151210: Articulated link chain other than roller chain, of iron/steel

73181500: Screws and bolts (excl. of 7318.11-7318.14), whether or not with their nuts/washers, ofiron/steel73239300: Table/kitchen/other household articles and parts thereof (excl. of 7323.10), of stainless steel.

19.27

60.94 56.05

70.9365.57

-

10

20

30

40

50

60

70

80

US$M

73043990 73089090 73151210 73181500 73239300

Figure 18Sum of the most imported NCMs of Chapter 73 by Brazil from China

Main imported products of selected positions 1998-2007


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21

Source: Comtrade/UN and Aliceweb/MDICNote: Long steel products (7304 - Tube or hollow profile, seamless iron/steel not cast) and articles ofiron and steel (7308 - Structures, parts of structures of iron or steel, nes; 7315 - Chain and parts thereof,of iron or steel; 7318 - Screws, bolts, nuts, rivets, washers, etc, iron, steel and7323 - Table, kitchen, household items of iron or steel nes)

3.2 Chinese access to developed markets: The United States and the EuropeanUnion

Overall the analysis of Chinese steel exports (Chapters 72 and 73) to the United Statesand the European Union indicated a significant increase in market share of the steel

value chain in both markets.

Chapter 73 of the Harmonized System (articles of iron and steel) includes not onlyproducts of the steel chain but also products manufactured by industrial consumers ofsteel (as indicated in iron and steel chain diagram). Thus the trade data presented in thetables below give an indicative view of the finished steel products for these markets.

Table 13

Main suppliers of iron and steel (Chapter 72) to the United States

(US$ M) Market share (%)

Countries 2003 2005 2007 2003 2005 2007

Canada 2,526 3,973 4,620 23.03% 16.82% 17.06%Brazil 1,119 2,742 2,779 10.20% 11.61% 10.26%

China 240 1,310 2,260 2.19% 5.55% 8.35%

Mexico 1,100 2,372 2,241 10.03% 10.04% 8.28%

Russia 272 1,199 1,148 2.48% 5.07% 4.24%

Germany 589 1,090 1,074 5.37% 4.62% 3.97%

South Korean 345 969 1,072 3.14% 4.10% 3.96%

Japan 494 830 1,066 4.51% 3.51% 3.94%

Sweden 279 615 844 2.55% 2.60% 3.12%

United Kingdom 424 817 815 3.86% 3.46% 3.01%

Others 3,581 7,705 9,160 32.65% 32.62% 33.83%

Total 10,969 23,621 27,079 100.00% 100.00% 100.00%Source: Comtrade/UN

Figure 19Main exported positions from Brazil and China to ALADI countries

(excl. Brazil)

-

20

40

6080

100

120

2003 2007 2003 2007

Brazil China

US$M

7304 7308 7315 7318 7323


22/40

22

Figure 20

Source: Comtrade/UN

Figure 21

Source: Comtrade/UN

Source: Comtrade/UN

Source: Comtrade/UN

Brazilian and Chinese steel productsexported to the US (Chapter 72)

(Value in US$)

224.4

1,074.601,020.60

2,160.702,198.10

1,124.60

1,859.00

2,553.30

2,631.20

2,528.70

0

500

1000

1500

2000

2500

3000

2003 2004 2005 2006 2007

US$ million

China Brazil

Brazilian and Chinese steel productsexported to the US (Chapter 72)

(Volume in tons)

1,020.60

2,631.20

5,291.80

2,528.702,160.70

2,553.30

7,367.00

5,576.20

7,468.606,802.50

0.001,000.002,000.00

3,000.004,000.005,000.006,000.007,000.008,000.00

2003 2004 2005 2006 2007

106t

China Brazil

19.89%10.55%

20.53%

49.03%Ferro-alloys (7202 HS-position)Flat steel (7209, 7210 and 7219 HS-positions)Long steel (7213, 7217 and 7228 HS-positions)Others

Figure 22Main steel products exported to the US by China, 2007

Figure 23Main steel products exported to the US by Brazil, 2007

45.66%

7.81%16.69%

18.94%3.19%7.71%

Pig iron (7201 HS-position)Ferro-alloys (7202 HS-Position)Semi-finished products (7207 HS-Products)Flat steelLong steel (7213 HS-Position)Others


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23

In Chapter 72, which concentrates most of the products of the steel industry, theChinese market share increased from 2.19% (2003) to 8.35% (2007) in the US (Table13). China was the third largest exporter in 2007. In the case of Brazilian exports,although Brazil has exported more than China in this period, in relative terms its marketshare in the total imports by the U.S. decreased slightly between 2005 and 2007.

Considering the trade profile, Chinas exports are concentrated on high value addedproducts (flat and long steel products) while Brazilian steel products are concentrated onraw materials (pig iron and ferro-alloys) and semi-finished products. High value addedproducts account for 22.13% of Brazilian exports.

Table 14Brazilian and Chinese steel products exported to the US

Chapter 73: Articles of iron and steel


Countries 2003 2005 2007 2003 2005 2007China 3,615.19 6,925.97 10,803.77 22.23% 26.81% 32.04%

Canada 3,120.85 4,485.74 5,190.06 19.19% 17.36% 15.39%

Mexico 1,772.47 2,401.98 2,806.51 10.90% 9.30% 8.32%

Japan 1,339.64 1,928.18 2,040.30 8.24% 7.46% 6.05%

Germany 747.83 1,219.57 1,633.87 4.60% 4.72% 4.85%

South Korea 713.16 1,167.75 1,454.18 4.38% 4.52% 4.31%

India 368.57 741.61 1,309.98 2.27% 2.87% 3.89%

Italia 346.62 570.26 874.75 2.13% 2.21% 2.59%

United Kingdom 316.69 314.55 549.79 1.95% 1.22% 1.63%

Brazil 174.50 347.71 383.20 1.07% 1.35% 1.14%

Others 3,750.37 5,731.96 6,669.96 23.06% 22.19% 19.78%Total 16,265.90 25,835.27 33,716.36 100.00% 100.00% 100.00%

Source: Comtrade/UN

China takes the top position in exports of finished steel products to the US. Its marketshare increased by around 10% in the period observed, reaching 32.04% in 2007 (Table14). Brazils exports to the US are marginal, reaching around 1% of total US imports.

Source: Comtrade/UN

Source: Comtrade/UN

Figure 24Main steel products exported to the EU by Brazil in 2007

(Chapter 73)

50.00%

31.43%

18.57%

Long products (7304, 7305, 7306 and 7307 HS positions)Iron and steel finished products (7318 and 7326 HS positions)Others

43.40

%

29.15

%27.4

6%

Long products (7304, 7306 and 7307 HS positions)Iron and steel finished products (7308, 7317 and 7318, 7323 and 7326 HS positions)Others

Figure 25

Main steel products exported to the

EU by China in 2007 (Chapter 73)


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24

Among the main suppliers of steel products to the European market, China was thecountry that has had the highest growth rates since 2003. Its market share increasedfrom 2.3% in 2003 to 17.5% in 2007. In the same period Brazil increased its exports tothe European bloc, but reduced its share in total imports, indicating trade diversion.

Table 15

Brazilian and Chinese steel products imported by European UnionChapter 72: Iron and steel

(US$ M) Market share (%)Countries 2,003.0 2005 2007 2003 2005 2007

China 305.8 1,382 9,731 2.28% 5.13% 17.53%

Russia 2,728.2 6,273 8,899 20.35% 23.28% 16.03%

Ukraine 1,128.5 2,952 4,618 8.42% 10.96% 8.32%

Turkey 918.3 1,466 3,426 6.85% 5.44% 6.17%

South Africa 1,029.8 1,998 2,576 7.68% 7.41% 4.64%

India 288.7 849 2,474 2.15% 3.15% 4.46%

Brazil 843.1 1,305.18 2,332 6.29% 4.84% 4.20%

South Korea 325.5 549.09175 2,316 2.43% 2.04% 4.17%

USA 732.1 1,035.36 2,208.53 5.46% 3.84% 3.98%Norway 816.08 1,193.32 1,630.31 6.09% 4.43% 2.94%

Others 4,292.99 7,947.69 15,316.15 32.02% 29.49% 27.58%

Total 13,409 26,950 55,527 100.00% 100.00% 100.00%

Source: Comtrade/UN

Figure 26

European Union imports of steel products

(Value - Chapter 72)

305.75

1,381.63

9,731.29

4,300.21

843.10 2,331.791,583.72

-

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

2003 2004 2005 2006 2007

US$million

C hina B raz il

Source: Comtrade/UN

Figure 27

Source: Comtrade/UN

European Unionimports of steel products(Volume - Chapter 72)

528.61

10,818.19

1,051.58

5,851.76

1,539.232,874.98

2,395.262,223.81

-

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

2003 2004 2005 2006 2007

106t

China Brazil


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25

In the case of European imports of steel products from Chapter 72, China concentratesits exports on high value added products (flat and long steel products) while rawmaterials and semi-finished products comprise around 50% of Brazilian exports toEurope. However, it must be emphasized that Brazilian exports of high value added

products have a significant market share of the European market compared to that of theUnited States.

.

Source: Comtrade/UN

The Chinese market share of finished steel products increased from 24.1% in 2003 to36.9% in 2007. Brazil kept its marginal share of total European imports.

Table 16Brazilian and Chinese steel products imported by European Union

Chapter 73: Articles of iron and steel


Countries 2003 2005 2007 2003 2005 2007

China 2,412.64 4,580.82 9,544.47 24.14% 29.64% 36.87%

Switzerland 1,547.05 1,909.16 2,543.58 15.48% 12.35% 9.83%

Turkey 769.04 1,303.35 2,420.51 7.70% 8.43% 9.35%

USA 1,289.47 1,574.90 2,382.32 12.90% 10.19% 9.20%

Japan 647.81 900.44 1,248.06 6.48% 5.83% 4.82%

India 325.02 607.28 1,045.65 3.25% 3.93% 4.04%

Norway 317.75 446.89 619.14 3.18% 2.89% 2.39%South Korea 181.30 318.47 568.84 1.81% 2.06% 2.20%

Ukraine 168.42 468.88 559.01 1.69% 3.03% 2.16%

Brazil 62.84 109.01 160.14 0.63% 0.71% 0.62%

Others 2,271.07 3,235.98 4,796.41 22.73% 20.94% 18.53%

Total 9,992.42 15,455.19 25,888.12 100.00% 100.00% 100.00%

Source: Comtrade/UN

3.3 Tariff profile in the mining/steel sector

Although applied tariff rates for imports in developed countries are relatively low, thesteel industry is a sector historically marked by protectionism. In this sector, non-tariff

Figure 28Main steel products imported from China in 2007

7.71%

62.76%

8.41%

21.12%

Ferro-alloys Flat steel (7208, 7210 and 7219 HS-positions)Long steel 07213 HS-position) Others

Figure 29

Main steel products imported from Brazil in 20078.97%

18.97%

21.00%31.10%

19.95%

Pig iron Ferro-alloys

Semi-finished products Flat steel (7208, 7209 and 7210 HS-positions)Others


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26

barriers and other measures such as antidumping, safeguard and countervailingmeasures are more significant than tariffs.

Source: World Trade Organization (WTO)

The protectionist measure that had greatest impact on world steel trade was thesafeguard measure imposed by the US in March 2002, which applied quotas and newtariffs as high as 30 percent and was immediately followed by a sharp drop in importsby the US. At the end of 2003 the measure was declared inconsistent with the WTOAgreement by the Appellate Body.

Source: WTO (World Trade Organization)

In the case of Brazil and China a tariff escalation21 can be noticed among the differentstages of the production of the mining and steel chain. The average duties for semi-finished and finished products are relatively higher than average duties for rawmaterials. For example, in Chapter 73 (Articles of Iron and Steel), in which the highvalue added products are listed, there are tariff peaks that reach between 20-30% forboth countries.

21 In order to protect the production industry, countries can set low tariffs on raw materials used by theindustry and higher tariffs for finished products.

Figure 30Tariffs on EU imports of mining and steel

products (average ad valorem duties %)

0 0 0

2.88

1.8

0.28

1.14

3.69

2.31

00.5

11.5

22.5

33.5

4

1998 2002 2006Chapter 26 - Ores slag and ashChapter 72 - Iron and steelChapter 73 - Articles of iron and steel

Figure 31Tariffs on US imports of mining and steel

products (average ad valorem duties %)

1.27

0.3

1.691.28

0.010.8

0.8

2.72.78

00.5

11.5

22.5

3


c

Figure 32Tariffs on Brazilian imports of Mining and Steel

products (Average ad valorem duties %)

2.89

10.61

15.05

5.84.4

13.712.1616.67

18.34

0

5

10

15

20

1998 2002 2006Chapter 26 - Ores slag and ashChapter 72 - Iron and steel

Chapter 73 - Articles of iron and steel

Figure 33Tariffs on Chinese imports of Mining and Steel

products (Average ad valorem duties %)

1.44

5.04

13.11

1.85 1.44

5.68.71

10.1210.45

02468

101214



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27

4. Trade patterns, investment profiles and outlook for the mining/steel productivechain in Brazil

One can therefore conclude that the pattern of trade relations between Brazil and Chinahas contributed to the gestation of a new production and marketing dynamic in thissector, which will tend to consolidate in the medium term. Data on the trade balance in

the three chapters that make up this productive chain 26, 72 and 73 indicate aconsolidation of trade surpluses in the initial links and a sharp reversal in Chapter 73starting in 2006, the year when the negative trade balance first appeared. Nonetheless,this is still low when compared to the sectors volume of production on the domesticmarket.

Source: Aliceweb/MDIC

The main features of the new commercial and productive dynamic of the iron ore/steelproductive chain, derived from the foregoing analysis, are the following:

Expansion and concentration of Brazilian exports in iron ore and growingprimarization of exports of semi-manufactured products;

Figure 34Brazils total trade balance, Chapters 26 and 72

0

2

4

6

8

10

12

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

US$bn

Chapter 26 Chapter 72

Figure 35Brazils total trade balance, Chapter 73

-300

-200

-100

0

100

200

300

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

US$M

Chapter 73


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28

Imports of steel products with higher value added originating from China,although its rate of penetration on the Brazilian domestic market is still quitelow;

Limits to the exports of steel products with higher value added to the majorworld markets;

Trend toward the concentration of Brazilian exports of steel products withhigher value added in Latin American markets, where Brazil already facesstrong competition from China, both inside and outside MERCOSUR.

The trade pattern established with China has been decisive to the change in the profileof international insertion of the Brazilian mining/steel sector.

If, on the one hand, the trends of primarization of Brazilian exports should notnecessarily expel companies that produce higher added value from the domestic market,they do however indicate a pattern of investments that should lead to an increasingspecialization of the Brazilian steel production chain, preventing it from asserting itself

as a major international supplier of higher value added goods.

If this scenario seems negative in terms of potential for technological development withdiversification of exports, neither is a scenario of stagnant production and exportsexpected much to the contrary. This will obviously depend on the dynamism of theglobal economy, but also the domestic economy, after the effects of the financial crisisare at least partially overcome and the commodity market returns to a more stablesituation.

Since the beginning of this decade Brazil has remained in ninth place as a producer ofcrude steel, accounting for 2.5% of worldwide production in 2007. Despite the trendsdiagnosed in this study, the investments foreseen are expected to make Brazils

production capacity jump from 33 million to 59 million tons of steel between 2007 and2012 (Instituto Brasileiro de Siderurgia, 2008).

The impacts of the rise of China which accounts for 40% of world production of crudesteel along with the effects of the commodity markets on the rise as well as theinternal combination of low exchange rates, high interest rates, and a modest industrialpolicy that prevailed until 2007, indicate a trend of strengthening the sector based on theless intensive links in technology, and Brazils taking advantage of the benefits in termsof natural resources.

In fact, a trend for increasing specialization and greater openness in the sector can beseen, maintaining the Brazilian steel sector with a high level of modernization but

without sufficient size to occupy new markets.

This trend may be mirrored by the patterns of internationalization of two of the majorcompanies in the sector: Vale (CVRD) and Gerdau.

Gerdau, a Brazilian steel company specializing in long steel, was a pioneer in theprocess of internationalization that began in 1980. Currently, more than half of itsinstalled capacity of 25 million tons is located outside Brazil, with an emphasis onNorth America. Its strategy of internationalization was initiated in order to circumventtariff barriers and other restrictions imposed by countries with large markets such as theUnited States. With the consolidation of the steel industry worldwide, the Gerdau groupbegan to focus on the countries of Latin America, Europe and, more recently, India,with a strategy of meeting the demand of the domestic markets in these countries and


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29

taking advantage of the increase in consumption resulting from economic growth insuch regions (Valor Econmico, 2007b).

Vales process of internationalization coincided with the expansion of the Chinesedemand for ores and the rise in prices due to the decline in stocks of commodities at thebeginning of the decade. Because of this scenario, its strategy of world

internationalization was guided mainly by the combination of a portfolio of high-qualitymineral reserves, geographic diversification, reduction in the cost of capital and anaggressive pricing profile. The high point of Vales internationalization processoccurred in 2006 with the acquisition of Inco, a Canadian mining company,transforming Vale into the worlds second largest mining corporation. Before that, Valehad made acquisitions in Europe and forged partnerships in China.

One differentiating element between the Vale strategy and Gerdaus strategy is theimportance of the strategic alliances with foreign companies that Vale has undertaken.These generally involve agreements to shareholder participation in steel companies thatalready belong to Vales customer portfolio. In return, the supply of iron ore is assured

to these companies, thus constituting a minimum and concrete volume of future demandfor the product offered by Vale (Valor Econmico, 2007c).

Thus Vale has created a customer portfolio abroad that, by having Vale itself as aminority or even majority shareholder, is less prone to sign agreements with itscompetitors. We can cite, as an example, a joint venture signed between Vale (CVRD)and the Chinese company Zhuhai YPM to build a pellet plant in China in 2006, wherethe iron ore would be supplied by Vale itself. It is worth mentioning that as part of thissame strategy, Vale owns ferro-alloy producing plants in Europe (wholly-ownedsubsidiaries in Norway, France and Germany) which use manganese originating fromCarajas, Par.

This investment in processing abroad while Brazil accounted for the export of basic rawmaterial does not coincide with the interests of the Brazilian State. Although Vale is nolonger a state-owned company, the Brazilian government is still a significantshareholder and one of the companys foremost providers of capitalization. PresidentLula publicly and repeatedly demanded investment in Vale in Brazil, especially for thesteel industry, in a clear attempt to break Vales profile as an exporter of basic rawmaterials.

As a result, two joint ventures were formed with Vales major global customers for theconstruction of steel mills in Brazil, involving the supply of iron ore by Vale not onlyfor the Brazilian plants but also for other units located abroad, owned by each of the

participating groups: Companhia Siderrgica do Atlntico (CSA) in Rio de Janeiro,Germany-based ThyssenKrup and Companhia Siderrgica de Pecm in Cear, andSouth Korea-based Dongkuk (Vale, 2008).

The bulk of the production from Vales iron and steelmaking complex in Brazil isintended for export to the partner companies themselves, since steel plates will beproduced in the crude state (i.e. without further processing, such as galvanization) andalso for Latin American countries.

This confirms the hypothesis that the strategies of internationalization of majorBrazilian companies in this sector will tend whether by the acquisition of plants tomeet other domestic markets, such as in the case of Gerdau, or in the case of adding

more value to Brazilian exports based on joint ventures, as in the case of Vale to


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30

reinforce a profile of productive specialization based in the segments with less addedvalue.

This hypothesis is reinforced by the internationalization strategies of Chinesecompanies, which are making external investments in logistics and distribution of ironore or in building plants situated at the top of the production chain, as shown in Table

17 below.


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31

Table 17: Internationalization Strategies of Chinese Companies in Brazil

Company Established Location Activities

China MetaisMinerals Ltda(ChinaMinmetals)

1999 Rio de Janeiro/RJ

The company will develop and fit out a 450 m3 ovenfor the Brazilian Cosipar in a project evaluated at27.4M Euros (US$ 42.2M). The Chinese company haspreviously equipped the steel production plant ofBrazilian Gerdau Aominas, which provided a returnof 182.6M Euros (US$ 281.2M). China Minmetalsprofited by 680M Euros (US$ 1.047bn) in 2007, twiceits 2006 profits, and it plans to invest US$ 2bn inBrazilian copper and aluminium production.

Sinosteel Br.Metalrgica

Ltda.

Rio de Janeiro/RJ

The second biggest iron ore importer in China, thiscompany provides materials and services to Chinese

companies and intends to establish partnerships withBrazilian companies to explore iron ore in Brazil. Themain targets are small companies in northeastern andnorthern states such as Bahia and Amap.

Source:Own production based on Valor Econmico


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References

Barbosa, Alexandre de Freitas and Mendes, Ricardo Camargo. 2006. Dialogue on Globalization BriefingPapers Economic Relations between Brazil and China: A Difficult Relationship. Bonn: Friedrich EbertStiftung.

Fonseca, Paulo S. M., Alecrim, Marcos D. and Silva, Marcelo M. 2007. Siderurgia: Dimensionamento

do Potencial de Investimento. Perspectivas do Investimento 2007/2010, BNDES.

Instituto Brasileiro de Siderurgia (Brazilian Steel Institute). 2008. Siderurgia: Investimentos e expansoda produo. Rio de Janeiro

Instituto Observatrio Social. 2008. A Economia Brasileira ps-Ascenso Chinesa: Anlise Setorial doPadro de Comrcio, dos Impactos sobre o Emprego e das Novas Estratgias Empresariais.So Paulo:Instituto Observatrio Social, BGB Bildungswerk.

Lo, Dic. 2006. Making Sense of Chinas Economic Transformation. London: Department of Economics,School of Oriental and African Studies, University of London.

Rosseti, Pedro de A. and Fernandes, Patrcia D. 2005. Para Onde Vai a China?O impacto do crescimento chins na siderurgia brasileira. Rio de Janeiro: BNDES Setorial.

Vale, 2008, Relao com investidores da Vale. Available at www.vale.com (in Portuguese). Retrieved on16 December 2008.

Valor Econmico. 2006a. Avano da China preocupaao mundial, 20 December 2006.

2007a. Setor que o Brasil na OMC contra a China, 30 May 2007

2007b. Com Chaparral, Gerdau produzir mais ao nos EUA do que no Brasil, 12 July 2007

2007c. Vale avana no caminho da internacionalizao, 28 June 2007.


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ANNEX I: Iron and steel sector

Table A1Main share of Chinese suppliers of selected positions 2003

Chapter 72: Suppliers

Code 7201Country Value US$ Kg % share

Russia 51,935,482 318,957,696 67.59%North Korea 14,857,750 118,874,028 19.34%

Brazil 7,311,862 60,038,000 9.52%

Other countries 2,737,922 15,097,600 3.56%

World Total 76,843,016 512,967,324 100.00%

Code 7202

Country Value US$ Kg % share

Kazaquistan 47,706,343 93,108,121 31.27%

Colombia22 30,650,396 9,736,465 20.09%

Brazil 24,554,845 2,904,713 16.10%

South Africa 21,798,394 42,932,225 14.29%

Other countries 27,836,642 19,952,948 18.25%

World Total 152,546,620 168,634,472 100.00%

Code 7207


Russia 384,351,417 1,528,743,360 26.50%Brazil 272,743,052 1,077,978,336 18.81%

Ukraine 247,050,190 1,011,131,608 17.03%

Turkey 143,331,265 551,677,512 9.88%

Mexico23 82,266,208 313,716,416 5.67%

Other countries 320,570,923 1,348,145,933 22.10%

World Total 1,450,313,055 5,831,393,165 100.00%

Code 7208


Japan 554,521,269 1,478,922,792 15.48%

Ukraine 515,105,170 1,796,124,440 14.38%

South Korea 461,398,670 1,182,970,181 12.88%

Russia 415,974,921 1,333,278,957 11.61%

Other Countries - Asia 252,218,498 692,272,668 7.04%

India 244,664,003 758,932,533 6.83%

Romania 156,625,725 526,189,358 4.37%United States 148,157,001 399,124,771 4.13%

Kazaquistan 117,807,515 445,994,196 3.29%

Brazil 94,809,032 306,064,607 2.65%

Indonesia 85,056,666 257,771,601 2.37%

Other countries 536,889,333 1,636,604,552 14.98%

World Total 3,583,227,803 10,814,250,656 100.00%

Code 7209


Other Countries - Asia 774,546,563 1,776,759,451 18.46%

Japan 558,772,295 1,194,059,074 13.32%

Russia 557,635,776 1,370,646,632 13.29%

South Korea 526,099,095 1,085,910,256 12.54%

Kazaquistan 250,799,192 645,960,866 5.98%

Ukraine 241,960,027 638,301,212 5.77%

India 191,141,281 421,536,771 4.56%Brazil 165,599,752 386,895,290 3.95%

United States 118,932,746 254,419,352 2.83%

Thailand 112,662,245 256,071,169 2.69%

South Africa 90,379,638 212,797,979 2.15%

Romania 76,345,521 197,091,300 1.82%

Mexico 24 74,813,361 162,431,947 1.78%

Argentina 59,947,953 142,616,861 1.43%

Other countries 396,106,592 900,974,573 9.44%

World Total 4,195,742,037 9,646,472,733 100.00%

22 Although Colombia is ahead of Brazil, the country is not a competitor: Colombia is an exporter of iron-

nickel alloy, while Brazil exports iron-niobium alloy.23 Mexico competes with Brazil in subposition 72071224 Mexico and Argentina compete with Brazil, especially in subposition 720917


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Table A2Chinese suppliers of Chapter 72 products 2005

Code 7201


Brazil 29,861,491 112,169,000 44.64%

North Korea 19,999,709 98,565,822 29.90%

Russia 14,530,642 53,163,256 21.72%

Other countries 2,507,120 6,178,274 3.75%World Total 66,898,962 270,076,352 100.00%

Code 7202


Colombia 160,404,081 27,839,846 25.25%

Kazaquistan 112,636,273 132,323,999 17.73%

New Caledonia 78,347,898 18,496,390 12.33%

Brazil 75,262,649 8,826,000 11.85%

Other countries 208,622,431 182,458,845 32.84%

World Total 635,273,332 369,945,080 100.00%

Code 7207


Ukraine 118,142,878 294,729,088 24.22%

Brazil 92,749,634 246,243,646 19.02%

Japan 46,609,075 147,048,476 9.56%

Mexico 25 45,426,686 76,424,584 9.31%United Kingdom 33,710,503 70,664,157 6.91%

Venezuela26 17,141,369 46,164,056 3.51%

Other countries 133,917,286 353,678,471 27.46%

World Total 487,697,431 1,234,952,478 100.00%

Code 7208


Japan 797,566,839 1,143,435,918 29.22%

Russia 380,179,043 679,436,291 13.93%

South Korea 331,529,799 467,577,339 12.14%


Thailand 171,349,158 311,392,614 6.28%

Kazaquistan 108,426,286 236,376,642 3.97%

Germany 104,165,036 104,177,381 3.82%

India 88,701,402 163,796,097 3.25%

Ukraine 69,731,892 134,902,387 2.55%Brazil 34,464,368 74,747,260 1.26%

Other countries 392,239,852 665,034,562 14.37%

World Total 2,729,818,070 4,454,916,643 100.00%

Code 7209


Other Countries - Asia 880,300,095 1,408,335,783 18.84%

Russia 828,982,522 1,285,881,880 17.74%

South Korea 784,631,646 1,115,677,617 16.79%

Japan 761,642,844 1,051,962,962 16.30%

Kazaquistan 282,019,215 477,631,372 6.03%

Brazil 163,934,214 287,852,891 3.51%

Ukraine 138,330,304 221,512,521 2.96%

India 130,711,322 182,987,355 2.80%

South Africa 98,608,794 148,812,066 2.11%

Turkey 88,167,061 135,104,377 1.89%Thailand 72,479,546 128,399,526 1.55%

Mexico 35,014,118 47,374,487 0.75%

Other countries 408,648,836 663,433,209 8.74%

World Total 4,673,470,517 7,154,966,046 100.00%

25 Mexico competes with Brazil in subposition 720712 (Half-Finished Products)26 Venezuela competes with Brazil in subposition 720712 (Half-Finished Products)


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Table A3Chinese suppliers of Chapter 72 products 2007

Code 7201Country Value US$ Kg % share

Brazil 117,535,601 332,502,752 48.95%

Russia 44,849,107 120,628,352 18.68%

Ukraine 30,219,000 71,950,000 12.58%

Other countries 47,528,925 170,630,196 19.79%

World Total 240,132,633 695,711,300 100.00%

Code 7202


Kazaquistan 653,261,455 659,642,086 26.17%

Colombia 580,160,438 38,752,808 23.24%

South Africa 460,298,615 547,784,832 18.44%

Brazil 188,008,746 13,900,000 7.53%

Other countries 614,661,052 283,584,182 24.62%

World Total 2,496,390,306 1,543,663,908 100.00%

Code 7207


Japan 34,222,900 94,235,481 51.11%

South Korea 10,986,100 23,994,583 16.41%

Germany 8,095,110 7,266,367 12.09%

North Korea 7,740,154 24,545,696 11.56%

Mongolia 1,532,644 5,816,916 2.29%

Italy 1,297,815 418,323 1.94%

Other countries 3,080,642 3,799,586 4.60%

World Total 66,955,365 160,076,952 100.00%

Code 7208


Japan 903,577,756 1,402,473,383 60.38%

South Korea 225,144,389 319,308,928 15.04%


Germany 66,955,429 39,631,704 4.47%

Hong Kong 20,944,749 21,873,562 1.40%

Kazaquistan 16,035,596 40,569,910 1.07%

United States 15,819,549 7,406,155 1.06%

France 15,609,239 6,827,516 1.04%

Brazil 11,682,288 21,891,852 0.78%

Austria 5,690,814 3,774,854 0.38%

Other countries 42,037,518 57,609,677 2.81%

World Total 1,496,589,979 2,236,806,287 100.00%

Code 7209


Japan 805,244,834 1,151,384,587 31.99%

South Korea 748,700,361 1,103,162,671 29.75%


Kazaquistan 97,078,555 199,162,052 3.86%

Thailand 55,897,334 93,702,153 2.22%

Russia 21,713,598 41,807,678 0.86%

Turkey 15,197,585 19,325,718 0.60%

Germany 13,094,381 17,037,741 0.52%

Nederlands 8,978,796 17,213,834 0.36%

Brazil 5,768,214 8,924,962 0.23%

Other countries 118,568,807 200,461,263 4.71%

World Total 2,517,028,925 3,813,162,756 100.00%

Code 7210


Japan 1,808,627,960 2,231,000,936 50.40%

South Korea 896,771,182 1,148,904,824 24.99%


Germany 31,437,074 33,981,827 0.88%

Kazaquistan 29,239,887 40,852,560 0.81%

Nederlands 14,125,158 19,309,899 0.39%

Norway 13,470,720 16,013,220 0.38%

Brazil 10,377,185 12,725,177 0.29%

Other countries 146,737,528 193,962,148 4.09%

World Total 3,588,198,482 4,495,409,130 100.00%


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Chinese exports to third markets of the most significant products exported from China toBrazil

Table A4Chinese exports to ALADI countries

Position 7304 Ferrous waste and scrap, remelt scrap iron/steel ingot

Year 2003 2004 2005 2006 2007


Argentina 193,141 851,267 3,001,073 4,771,011 9,150,696

Brazil 2,920,925 4,461,580 8,720,358 16,727,039 50,389,918

Chile 490,393 614,352 872,403 11,405,058 8,611,476

Colombia 49,602 33,052 1,352,100 10,554,254 28,517,941

Cuba 85,345 1,954,551 295,573 399,168 834,822

Ecuador 0 3,351,323 9,726,213 12,423,369 29,791,458

Mexico 54,494 497,538 1,431,311 5,472,890 7,753,421

Paraguay 0 0 0 3,523 121,414

Peru 395,321 129,581 885,233 19,598,749 25,291,275

Uruguay 0 101,038 12,191 153,563 29,360Venezuela 0 1,878,224 6,556,724 1,619,882 821,599

Total ALADI 4,189,221 13,872,506 32,853,179 83,128,506 161,313,380

World 350,466,696 631,269,605 1,487,027,203 2,860,386,152 4,789,490,797

% ALADI 1.20% 2.20% 2.21% 2.91% 3.37%Exp. China-ALADIBase 100 = 2003 100.00 331.15 784.23 1,984.34 3,850.68

Table A5Brazilian Exports to ALADI countries

Position 7304 Tubes, pipes etc, seamless, iron nesoi and steel

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$

Argentina 353,151 2,766,090 2,495,033 406,725 474,073

Bolivia 1,316,988 197,428 32,924 3,687,652 725,737

Chile 1,780,774 2,221,868 3,582,789 5,008,792 8,430,401

Colombia 4,998,245 7,078,085 14,668,073 13,142,472 14,305,077

Cuba 289 1,231,811 910,847 3,684 100,560

Ecuador 608,076 147,589 59,732 21,936,561 2,962,226

Mexico 533,664 1,090,027 632,265 1,004,976 350,824

Paraguay 193,067 100,775 231,998 640,962 487,698

Peru 3,567,136 3,726,021 986,225 7,759,934 4,544,259

Uruguay 250,641 188,748 146,038 1,055,483 400,392Venezuela 3,929,503 1,924,007 19,456,988 7,419,248 15,245,267

Total ALADI 17,531,534 20,672,449 43,202,912 62,066,489 48,026,514

World 83,759,085 117,434,271 $194,692,818 336,684,605 220,434,026

% ALADI 20.93% 17.60% 22.19% 18.43% 21.79%Exp Brazil-ALADIBase 100 =2003 100.00 117.92 246.43 354.03 273.94


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Position 7315 Chain and parts, of iron or steel

Year 2003 2004 2005 2006 2007


Argentina 2,443,615 3,816,277 4,252,754 4,134,782 6,655,714Bolivia 0 38,241 18,193 20,082 31,577

Brazil 11,800,730 17,066,248 19,126,279 22,739,028 41,864,761

Chile 2,601,685 4,094,788 4,584,403 7,391,645 8,415,135

Colombia 826,728 1,903,044 2,449,919 2,169,806 3,397,863

Cuba 54,807 99,981 209,818 210,125 111,273

Ecuador 656,778 926,436 744,098 882,047 870,468

Mexico 3,144,975 3,965,279 4,047,107 4,945,237 5,597,556

Paraguay 218,906 417,838 617,565 563,232 561,199

Peru 1,494,692 1,801,639 2,593,243 3,217,174 4,001,456

Uruguay 259,049 437,682 506,830 524,919 551,230

Venezuela 257,420 727,789 1,827,253 1,452,747 2,230,917

Total ALADI 23,759,385 35,295,242 40,977,462 48,250,824 74,289,149World 282,977,059 401,230,886 522,592,409 643,964,309 779,226,304

% ALADI 8.40% 8.80% 7.84% 7.49% 9.53%

Base 100 = 2003 100.00 148.55 172.47 203.08 312.67

Table A9

Brazilian exports to ALADI countries

Position 7315 Chain and parts, of iron or steel

Year 2003 2004 2005 2006 2007


Argentina 489,105 824,580 1,126,724 1,295,014 1,807,765

Bolivia 201,372 276,511 283,421 656,446 670,480

Chile 235,134 267,868 707,414 342,474 1,080,768

Colombia 185,031 174,570 270,595 424,702 367,603

Cuba 129,495 470,583 159,753 1,371,381 180,631

Ecuador 42,073 125,751 170,030 459,205 139,933

Mexico 158,802 419,733 327,372 737,339 237,044

Paraguay 373,050 569,348 567,586 969,849 1,320,040

Peru 58,967 65,643 73,488 180,771 148,753

Uruguay 74,015 118,016 201,512 93,292 103,045

Venezuela 179,426 215,023 279,756 382,933 489,417

Total ALADI 2,126,470 3,527,626 4,167,651 6,913,406 6,545,479

World 7,167,176 17,736,230 16,554,780 21,512,153 54,112,971% ALADI 29.67% 19.89% 25.17% 32.14% 12.10%

Base 100 = 2003 100.00 165.89 195.99 325.11 307.81


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Position 7318 Screws, bolts, nuts, washers etc, iron or steel

Year 2003 2004 2005 2006 2007


Argentina 1,110,130 2,363,396 4,798,366 6,894,089 12,172,976Bolivia 728,812 747,178 1,150,029 1,470,915 2,391,159

Brazil 2,255,917 4,626,740 17,646,922 26,163,830 37,289,672

Chile 2,612,909 5,541,178 9,366,968 12,034,642 15,401,552

Colombia 1,223,526 2,149,656 5,497,250 8,997,045 13,825,744

Cuba 35,758 516,061 322,711 1,009,099 746,140

Ecuador 1,122,142 1,666,775 1,809,352 3,668,079 3,631,464

Mexico 2,724,596 7,115,016 12,106,444 21,411,740 33,053,865

Paraguay 125,835 99,338 168,646 353,482 405,449

Peru 1,329,393 2,733,626 3,861,726 5,850,105 9,733,701

Uruguay 41,688 101,613 133,450 329,695 346,549

Venezuela 219,727 809,210 3,565,766 5,848,201 8,749,729

Total ALADI 13,530,433 28,469,787 60,427,630 94,030,922 137,748,000World 803,081,773 1,278,585,597 1,784,977,390 2,359,384,249 3,257,016,785

% ALADI 1.68% 2.23% 3.39% 3.99% 4.23%

Base 100 =2003 100.00 210.41 446.61 694.96 1,018.06

Table A11

Brazilian Exports to ALADI countries

Position 7318 Screws, bolts, nuts, washers etc, iron or steel

Year 2003 2004 2005 2006 2007


Argentina 11,348,158 19,886,965 22,625,999 25,863,550 29,520,141

Bolivia 678,972 1,072,740 1,845,663 1,744,429 2,874,998

Chile 1,701,836 2,073,530 4,157,135 3,011,011 3,326,915

Colombia 594,591 1,273,856 2,324,673 1,804,946 1,839,882

Cuba 75,962 172,253 702,370 120,011 400,495

Ecuador 577,374 706,800 1,322,907 1,260,488 1,279,875

Mexico 2,819,006 3,380,974 3,603,861 4,088,863 4,290,042

Paraguay 1,530,784 2,202,189 2,629,767 3,097,938 4,019,341

Peru 338,757 414,660 651,942 844,689 1,202,918

Uruguay 1,100,457 2,325,439 2,822,048 2,850,766 3,275,295

Venezuela 1,762,565 3,480,297 2,707,462 4,060,347 4,573,762

Total ALADI 22,528,462 36,989,703 45,393,827 48,747,038 56,603,664

World 49,241,672 73,265,097 87,564,309 98,888,582 115,539,649% ALADI 45.75% 50.49% 51.84% 49.29% 48.99%

Base 100 =2003 100.00 164.19 201.50 216.38 251.25


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Position 7323 Household articles and parts, iron and st, ir or steel wool etc

Year 2003 2004 2005 2006 2007


Argentina 2,701,439 2,842,400 3,871,895 6,426,479 5,735,971Bolivia 1,775 24,447 9,612 50,750 46,569

Brazil 1,994,777 7,005,349 13,696,142 19,472,464 30,424,916

Chile 9,983,816 9,431,506 11,555,360 14,754,947 15,949,143

Colombia 930,256 1,194,609 3,419,164 4,070,032 4,839,957

Cuba 826,265 514,553 1,024,895 1,226,792 1,661,412

Ecuador 3,418,211 2,691,649 3,291,327 3,215,501 3,145,743

Mexico 14,660,847 18,975,979 14,862,642 19,857,738 19,174,642

Paraguay 74,518 240,717 148,423 260,083 251,280

Peru 1,250,730 1,211,951 1,332,955 1,878,820 2,579,040

Uruguay 1,043,579 1,064,070 954,192 2,124,530 2,086,961

Venezuela 955,844 1,438,979 2,953,690 5,749,915 4,237,048

Total ALADI 37,842,057 46,636,209 57,120,297 79,088,051 90,132,682World 1,721,014,279 1,875,707,710 2,071,150,348 2,374,701,127 2,650,674,008

% ALADI 2.20% 2.49% 2.76% 3.33% 3.40%

Base100=2003 100.00 123.24 150.94 209.00 238.18

Table A13

Brazilian exports to ALADI countries

Position 7323 Household articles and parts, iron and st, ir or steel wool etc

Year 2003 2004 2005 2006 2007


Argentina 288,697 559,596 468,363 776,091 1,082,986

Bolivia 581,748 622,829 769,980 1,096,077 1,240,407

Chile 363,247 372,430 453,113 462,151 347,077

Colombia 151,235 190,314 413,060 273,855 198,913

Cuba 38,794 4,858 37,559 133,268 7,209

Ecuador 565,450 779,473 353,901 815,383 1,143,667

Mexico 644,194 572,022 438,840 627,988 489,087

Paraguay 1,261,741 1,592,041 1,732,803 1,796,745 1,918,212

Peru 126,467 54,520 78,410 129,927 158,030

Uruguay 93,822 170,136 259,575 187,547 325,416

Venezuela 8,689 77,148 267,102 388,243 1,318,044

Total ALADI 4,124,084 4,995,367 5,272,706 6,687,275 8,229,048

World 18,292,005 18,949,893 14,215,730 16,587,170 18,235,203% ALADI 22.55% 26.36% 37.09% 40.32% 45.13%

Base 100 = 2003 100.00 121.13 127.85 162.15 199.54

Source: Comtrade/UN

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