Steel in Argentina Current Behavior Changes Analysis¶

Ongoing Behavior Changes¶

Analysis of the provided reports and recent data indicates significant ongoing behavior changes impacting relationships and demand within the Argentine steel value chain. The most prominent change is a substantial contraction in domestic demand experienced throughout 2024 and continuing into early 2025. This is clearly reflected in the sharp declines in crude steel production and laminate output, as reported by Acero Argentino. Crude steel production fell by 26% in 2024 [Value Chain Report], with further year-on-year declines observed in January (-26.5%) and February (-2.2%) of 2025 [Value Chain Report, 2]. While March 2025 showed a significant rebound compared to March 2024 (+37.0%), particularly in rolled products due to the return to operation of plants that faced unscheduled stoppages, the overall context of weak demand persists. Hot-rolled laminate production also saw substantial drops, including a 13.4% year-on-year decrease in February 2025, exacerbated by plant stoppages linked to delayed demand recovery. [Value Chain Report, 2] This depressed demand environment has led to very low capacity utilization rates in the steel industry, reaching 40% in February 2025. [Value Chain Report]

This overarching decline in demand stems from broader macroeconomic challenges in Argentina, including industrial contraction and a significant downturn in key steel-consuming sectors in 2024. [Value Chain Report, 11] The construction sector, a major consumer of long steel products like rebar and profiles, experienced a challenging period in 2024, contributing to the weak demand. [Value Chain Report, 10] However, recent data for March 2025 shows a significant increase in production for the civil construction sector compared to March 2024 (+17.1%), despite a slight month-on-month decline. The automotive sector also faced production decreases in 2024 [Value Chain Report], but showed positive year-on-year growth in production in February 2025 (+14%) and April 2025 (+5.8%), alongside a substantial increase in domestic sales in April 2025 (+134.4%). This increase in automotive sales is linked to factors like wider product availability, tax reductions, and increased financial loan offers to consumers. Demand from the domestic appliances sector has been reduced due to increasing competition from imports. Conversely, the energy sector, particularly linked to Vaca Muerta, has shown increased or stable demand for steel products, such as seamless tubes, supported by the approval of incentives for large investments under the RIGI program. [Value Chain Report, 1, 2, 13, 16] Machinery and agriculture equipment potential sales also show good perspectives due to a promising crop expected.

Another critical behavior change impacting the value chain is the increased pressure from imports, particularly from countries like China, Turkey, and Brazil. [Value Chain Report, 10] This intensified competition is partly attributed to the strengthening of the peso against the dollar under recent economic measures, making imports relatively cheaper compared to domestically produced steel, which faces high local costs in dollars, taxes, and logistical challenges. [Value Chain Report, 10] This dynamic is forcing local producers to compete on price in a shrinking market, impacting their sales volumes and profitability. Acindar, for example, saw a significant drop in monthly sales volume compared to its capacity due to falling demand and increasing imports in late 2024.

These changes in demand behavior and increased import competition are directly affecting commercial relationships throughout the value chain. With reduced demand, steel producers are experiencing lower order volumes from their direct customers (OEMs, large construction firms, distributors). This can strain long-term contracts and lead to renegotiations or reduced adherence to previously agreed-upon volumes. Distributors (wholesalers and retailers) are facing lower sales to their end customers, resulting in reduced orders from the mills and increased inventory management challenges. The intense import competition puts pressure on domestic distributors and service centers to lower their prices, impacting their margins and relationships with local mills. For integrated producers, the low capacity utilization impacts the efficiency of their internal value chain transfers from primary to secondary production. The focus for some players, like Tenaris with its export-oriented seamless tubes, might shift further towards international markets to offset weak domestic demand, although they also face import competition. [Value Chain Report, 10] The variability in demand across different end-user sectors (weak in construction initially but showing signs of recovery, improving in automotive, strong in energy) means that relationships with customers in resilient sectors are becoming more critical, while those in struggling sectors require more flexible or revised terms.

The overall behavior change is a move from a challenging but relatively stable demand environment to one characterized by significant contraction, sector-specific variability, and heightened import competition, forcing players across the value chain to adapt their purchasing, production, inventory, sales, and pricing strategies.

Table of the impact of these changes on the value chain¶

Value Chain Stage	Impact of Ongoing Behavior Changes
Raw Materials Procurement & Preparation	Reduced demand from primary production leads to lower raw material requirements. Potential renegotiation or reduction in volumes under long-term supply contracts with international miners and energy providers. Reduced demand for domestic scrap.
Primary Production (Ironmaking & Steelmaking)	Significant decrease in production volumes due to low demand. Leading to low capacity utilization (e.g., 40% in Feb 2025). [Value Chain Report] Increased per-unit production costs due to underutilization. Potential temporary plant stoppages.
Secondary Processing (Rolling & Finishing)	Lower intake of semi-finished products from primary production. Reduced rolling and finishing activity. Plant stoppages and reduced shifts. Increased inventory of finished goods if production outpaces sales.
Distribution & Commercialisation	Reduced sales volumes for wholesalers and retailers. Increased competition on price due to weak demand and imports. [Value Chain Report, 10] Strained relationships with mills due to lower orders and requests for better terms. Inventory management challenges.
End-use Fabrication & Consumption	Reduced activity in steel-consuming sectors (construction, manufacturing) leading to lower steel purchases. [Value Chain Report, 11] Sector-specific variations (e.g., energy showing resilience, automotive improving). Increased potential for using imported steel if cheaper.

References¶

Value Chain Report on the Steel Industry in Argentina (Provided Text)
Steel in Argentina Final Customers Identification (Provided Text)
Steel in Argentina Current Demand Behavior Analysis (Provided Text)
Crude steel production in Argentina increases in March.
Crude steel production in Argentina increases in February.
Steel Times International Digital February 2025.
Vehicle production in April increases in Argentina - Steel Orbis.
Fall in Steel Production in Argentina in 2024 - news.
Argentina's steel production sees partial recovery in July amid yearly declines - SteelRadar.
CAA: Argentina's crude steel production falls by 22% in Oct yoy - Yieh.
Unbalanced steel market again hitting Argentina's Acindar - BNamericas.
Exports to Argentina fall almost 30% amid weak demand - DatamarNews.
Metals Industry Update Q3 2024 - KPMG Corporate Finance LLC.
The future of exports and the key role of insurance in the logistics chain.
Argentina - Policies & action | Climate Action Tracker.
Argentina Construction Market Forecast Report 2025-2034.
Energy in Focus: 2025 Outlook Report | Enverus.
Oil, Gas and the Transition to Renewables 2024 - Argentina | Global Practice Guides.
Argentina Construction Industry Market Size & Forecast.