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THE IMPACT OF CHINA’S GLOBAL ECONOMIC EXPANSION ON LATIN

AMERICA

WORKING PAPER No. 10

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

Alexandre Barbosa and Débora Miura Guimarães


PROSPECTIVA: Consultoria Brazileira de Assuntos Internacionais

March 2009
Acronyms

ALADI Latin American Integration Association


CIF cost, insurance and freight
CNAE Brazilian Classification of Economic Activities
DNPM National Department of Mineral Production Brazil
FOB freight on board
HS Harmonized System
IISI International Iron and Steel Institute (now the World Steel Association)
MDIC Ministry of Industry, Commerce and Foreign Trade
NCM Mercosur’s Common Nomenclature
nes not elsewhere specified
nesoi not elsewhere specified or included

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Introduction
This study is intended to complement the more general analysis of the economic
relations between Brazil and China through a sectoral approach. In the first part, we
present the methodology used. In Part 2, we give a general overview of the production
sectors of both countries, emphasizing their historic context, development of the steel
industry and how their productive structure functions. In Part 3 the dynamics of trade
and investment are analyzed, taking into account the regional context and the main
consumer markets of the mining/steel sector, and then highlighting the main trends in
the 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 of
displacement of Brazil’s trade with other countries in the region. It is based on the
assumption that this trade dynamic tends to influence investment decisions as well as
the evolution and profile of production in Brazil.
Sectoral trade data are covered in Chapters 26, 72 and 73 of Mercosur’s Common
Nomenclature (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 ascertain
whether or not Brazilian exports in the region have been reduced as a result of increased
Chinese 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 the
aforementioned chapters were organized in order to measure the evolution of exports,
imports and trade balances of specified sectors, and subsequently identify the most
relevant NCM codes and positions in the trade agenda of both countries. The time
period covered for exports and imports was from 1998 to 2007.
Brazilian and Chinese trade flows to the United States and the European Union were
also considered in order to check evidence of trade diversion and to complement the
bilateral trade mapping.
Based on the mapping of the main NCM codes and positions that Brazil exports and
imports from China, in the next stage we sought to identify the Chinese products that
are competing directly with Brazilian products, both on the domestic market and in the
Latin American markets, in which Brazil has a considerable market share.
Using this method of organizing trade data, three major patterns of trade flow behavior
were identified: 1) growth of Chinese exports and Brazilian exports to the ALADI
countries; 2) growth of Chinese exports and decrease of Brazilian exports to the ALADI
countries (Tables 1); and 3) growth of Chinese exports to ALADI countries and to
Brazil with marginal presence of Brazilian exports to the ALADI countries.

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Table 1
Patterns 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 ++
Flat-rolled products of iron or non-alloy steel of a width of 600
7208 mm or more, hot-rolled, not clad, plated or coated. +-
Iron and steel 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
7209 coated. +-
Tubes, pipes and hollow profiles, seamless, of iron (other than
7304 cast iron) or steel. +-
7308 Structures and parts thereof, of iron or 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 UNCTAD’s publication Iron Ore Market 2007-2009, world production of
iron ore grew by 9% in 2007, reaching 1.6 billion tons. The global output increased
mainly in the four major producing countries Brazil, China, Australia, and India.

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


Reserves Production
Countries 2007
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 Commodity
Summaries (USGS) 2008; United Nations Conference on Trade and Development
(UNCTAD)
Note: (e) Estimated data, except for Brazil and World total figures.
The world’s 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 ore
increased 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 the
world 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 world
production excluding China rose by 2.8% a year.

Figure 1 Figure 2
World crude steel production World crude steel production
1600 600
1400 500
1200
400
106 ton

106 ton
1000
800 300
600 200
400
100
200
0 0
2002 2003 2004 2005 2006 2007
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
CHINA EU JAPAN
C.E.I. BRAZIL

Source: World Steel Association, (formerly IISI)

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

22.1%
35.5%
2.5%
7.1%
9.0%
8.7% 15.2%

CHINA EU JAPAN C.E.I.


USA BRAZIL OTHER

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

1
International Iron and Steel Institute data
2
Para onde vai a China? O impacto do crescimento chinês 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 the
steel production (reduction, refining and ingot casting).

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production of cold-rolled steel (high added value products) should be in the consumer
markets.
Compliance with environmental agreements is forcing developed countries to close
down inefficient and polluting steel companies, directing the ‘hot part’ of production to
countries 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 and
the construction sector. It is made up of large companies operating in the different
stages of the production process, from processing iron ore into pig iron to the
production of semi-finished and rolled products. The main raw materials used by steel
industry are iron ore and coal. Within the steel production chain, the main products are
classified 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 correspondence
between two classification systems: the Harmonized System (HS), used for international trade, and the
Brazilian Classification of Economic Activities (CNAE).

2.3 The Brazilian iron ore market


In 2007, Brazilian production accounted for 22% (354.7 million tons) of world
production. Minas Gerais (72%) and Pará (26%) states were the main producers.
The rate of growth of production was very low until 2002 (around 2% a year). Since
2003, propelled by strong international demand, especially from China, the production
growth rate reached 13.45% a year in 2007.

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Figure 5
Brazilian iron ore production
400
350 355
318
300
281
10Mt
250 262
213 234
200 210 212
194
198
150
100
50
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: DNPM
Brazilian domestic consumption is concentrated on pellets and pig iron products that in
the mining/steel chain are classified as raw materials. In 2007, domestic consumption of
iron ore was of around 119.1 million tons (an increase of 9.2% compared to the
previous 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 to
2006, exports increased 11.1% in volume and 18.0% in value. China remains the main
destiny of Brazilian exports (in US dollars), accounting for 35% of Brazilian iron ore
exports. Other export destinations were Japan (11%), Germany (9%), Italy and France
(5%) and South Korea (3%).

Table 3
Brazilian 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, there
are government incentives for iron ore exports. In Brazil, mining companies are

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

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

2.4 Brazil’s 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 being
channeled to foreign markets.
During the period of privatization (1994 to 2004), the steel companies invested US$ 13
billion, 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 million
tons.5
Currently, the sector comprises the following companies: Acesita, Aços Villares,
Companhia Siderúrgica Belgo Mineira, Companhia Siderúrgica Nacional (CSN),
Companhia Siderúrgica de Tubarão (CST), Gerdau Açominas, Siderúrgica Barra
Mansa, Usiminas/Cosipa, VandM do Brasil and Villares Metals.
The Brazilian steel industry produces a wide range of semi-finished and finished steel
products; however its foreign trade profile concentrates mainly on semi-finished
products (the most dynamic segment in the international trade of steel) because of the
lower incidence of trade barriers (see Section 3).
Projected investments are expected to make Brazil’s production capacity jump from 33
million to 59 million tons of steel between 2007 and 2012. Foreign producing groups
are 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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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 2001
and 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 (the
United 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 is
relatively higher, considering that the manufacturers are close to the Brazilian iron ore. Taking
advantage of the low cost of steel production in order to gain scale and competitiveness, Brazilian
companies are forming joint ventures with foreign companies to compete with China (Valor
Econômico, 2006a).
Moreover, the Brazilian steel industry, together with the government, is looking for measures to
prevent future losses caused by the continued growth of Chinese steel exports. In 2007, IBS (the
Brazilian Steel Institute) suggested the participation of Brazil as the third part in the discussions
opened by the United States and Mexico in the WTO. The two countries claimed that China is
subsidizing 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 the
United States are negotiating unilateral quotas for Chinese steel imports. Neither are satisfied with
the 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 has
increased the tariff on exports of semi-finished steel and finished products from 10% to 15% and
reduced export credit. The government has also created a licensing system for exports. (Valor
Econômico, 2007a)

2.5 The Chinese iron ore market


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

Figure 6
China’s total trade balance (2601 HS position: iron ore)
0

-100 1998 1999 2000


2001 2002
Million t

2003
-200
2004
-300 2005
2006
-400 2007
-500

Source: Comtrade/UN

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

6
Figures from Raw Material Group (RMG).

9
suppliers. Consequently, Chinese authorities are concerned that this ratio will fall even
further, curbing economic growth. In order to avoid this situation, Chinese policy has
focused 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, there
were over 8,000 iron ore mines in total. In the official statistics, 3,867 are mentioned, of
which there are 34 ‘large’ mines, 43 ‘medium’, 1,407 ‘small’ and 2,383 ‘very small’
operations. The large mines account for 45% of total production, the medium, 11%,
small mines 17% and very small operations 27%.8

2.6 China’s steel industry


The growing demand for steel in China is a result of investments in infrastructure
needed to modernize the country. In order to meet this demand, in 2005 China
announced the government’s Development Policy for the Steel Industry, whose main
targets were to restructure the Chinese steel sector, improving the efficiency and
competitiveness of their companies.
Following the world trend, Chinese government policy has focused on the consolidation
of the fragmented steel industry. This movement of mergers and acquisitions in China
has been very rapid. In 2004, there were only two major steel companies: Baosteel and
Anshan Steel, producing over 10 million tons per year. In 2005, the group of companies
of the same size totalled ten. National policies seek to establish two groups of
companies by 2010, each with capacity of producing around 30 million tons a year.9

Table 4
China’s crude steel consumption
2001-2007
Million tons 2001 2002 2003 2004 2005 2006 2007
Consumption 169.77 205.73 258.58 296.58 355.57 388.26 434.36
Production 151.03 182.25 222.34 282.91 355.79 422.99 489.24
Net 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 production
2001-2007
Base Year 100 = 2001 2001 2002 2003 2004 2005 2006 2007
Consumption 100.00 121.18 152.31 174.70 209.44 228.70 255.85
Production 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)

10
In terms of the structure of production, the Chinese industry is largely linked to long
steel products, particularly because of initial demand for industrial construction, civil
aviation and the lower complexity of production of this kind of product.10
Since 2003 flat steel products (which were the main products imported) have received
investment to increase production to meet demand. Such investment resulted in an
increase of production capacity and import substitution in 2004.

Figure 7 Figure 8
China’s total trade balance. Chapter 72: Iron and steel China’s total trade balance. Chapter 72: Iron and steel
50 80
40 60
30 40

Million t
US$ bn

20 20
10
0
0
-20
-10
-20 -40
-30 -60
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Exports Imports Trade Balance Exports Imports Trade Balance

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 and
2007, 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 itself
has decisively contributed – accounted for half of the increase in sales in dollars during
the period.

‘10 Para onde vai a China? O impacto do crescimento chinês 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 and
concentrates thereof) account for 97% of the total sales of that chapter.

11
Figure 9
Brazilian exports to China
Iron ore (2601 HS position)
4.00 120
3.50
100
3.00
2.50 80
US$ bn

Kg bn
2.00 60
1.50 40
1.00
20
0.50
- 0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

US$ Kg

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

Figure 10
Brazilian exports to China
Iron ore: 2601 HS position (year base 100 = 1998)
2000 1200
1800 998.74
1600 1000
1400 1906.82 800
1200
1000 501.13 600
800 947.31
328.55 400
600
400 387.41 200
200
0 0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

US$ Kg

Source: Aliceweb, MDIC

In terms of participation on the Chinese market, Brazil appears as the second largest
supplier of ore, after Australia. After gaining market share between 1998 and 2002 –
and despite the significant expansion in exports between 2002 and 2007 – Brazil has
suffered a reduction of its share in overall Chinese ore imports in recent years, reaching
the figure of 18% last year. India was outstanding because of a more pronounced
increase in ore exports than Brazil, elevating its position on the Chinese market, already
coming in at 16.3% in 2007.

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Table 6
Brazilian share in Chinese imports for Chapter 26
1998 2002 2007
US$ US$
Country Share Country Share Country US$ thousand Share
thousand thousand
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%
United
Gabon 35,564 1.55% Iran 69,745 1.63% 1,067,928 1.98%
States
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- TOTAL- TOTAL-
2,288,818 100.00% 4,280,721 100.00% 54,049,920 100.00%
World World World
Source: Comtrade/UN
When considering the Brazilian share for position 2601, which is where the products
exported by Brazil to China are concentrated, the Brazilian share is even greater, from
around 20% in 1998 to 28.1% in 2007 (Table 7). In the same period, Australia and
South Africa have seen their market share fall while India increased its market share,
reaching 23.18% in 2007.
Table 7
Brazilian share in Chinese imports for position 2601
1998 2002 2007
US$ US$ US$
Country million Share Country million Share Country Million Share
Australia 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- TOTAL- TOTAL-
World 1,467.76 100.00% World 2,769.07 100.00% World 33,797 100.00%
Source: Comtrade/UN

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This figure is far higher than the $3.8 billion quoted on the previous page. There are different reasons
why 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 third
countries; goods being classified differently etc). However, it may be that some of Brazil’s exports are
going 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 ores
and concentrates), which explains the increase in the market share from 2002 to 2007, competing with the
Brazilian product.

13
Seeking to follow the evolution of trade relations between Brazil and China in Chapters
72 and 73 of the steel value chain, as well as the impacts on transactions with ALADI
partners, an initial observation refers to Chapter 72 – which is at a more advanced place
in 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, which
reached its peak in 2003 at just under US$ 800M, only to experience a sharp drop in the
years 2004 and 2006.

Figure 11
Trade flow Brazil–China (Chapter 72: Iron & steel)
800
700
600
US$ M

500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Export Import Trade Balance


Source: Aliceweb, MDIC
In parallel, China became an exporter of semi-finished and finished iron and steel to
Brazil since 2004 within this chapter, reaching a sales flow of $400M in 2007, when the
Brazilian trade surplus for this chapter was practically zero. The drop in Brazilian
exports 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 pig
iron).
Figure 12
Trade balance Brazil–China (Chapter 72: Iron and steel)
800

600

400
US$ M

200

0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
-200

-400

Pig iron Ferro-alloys Semi-finished products


Flat products Long products Others
Source: Aliceweb, MDIC

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Note: Pig iron (7201 and 7203 HS-positions); Ferro-alloys (7202 HS-position); Semi-finished
products (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 NCM
sales continued to rise, still driven by the price factor, while in the other NCMs, China
has started to rely on domestic supply or on imports coming from other countries. The
two cases in question are precisely the products at the top of the value chain, namely
crude non-alloy cast iron and ferro-niobium.
Figure 13
Brazilian exports to China
Main products: Chapter 72: Iron and steel

250
US$ Million
200
150
100
50
-
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

72011000 72029300 72071200 72083990 72091700

Source: Aliceweb, MDIC

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 with
less value added (accounting for almost 50% of Chinese imports for position 7201,
surpassing Russia during the period 2003 to 2007), in other positions Brazil is
increasingly marginal, which can be explained in part by the expansion of the Chinese
steel industry (see the section above on China’s 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 forms
15
Ferro-alloys
16
Semi-finished products of iron or non-alloy steel
17
Flat rolled products of iron or non-alloy steel, of a width of 600 mm or more, hot-rolled, not clad,
plated or coated
18
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

15
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 the
laminated (rolled) iron and steel products are grouped. About half of all Brazilian
imports from China are found this chapter.
Although it is still early to indicate a shift in Brazilian exports of iron and steel
laminates to the Latin American markets, in the countries highlighted in the tables an
expansion of Chinese exports can be seen, as well as a drop or smoothing in Brazilian
exports, especially as of 2006. In a period of just four years, total Chinese exports to the
ALADI countries (excluding Brazil) under NCMs 7208 and 7209 went from almost
zero to nearly the same level as Brazilian exports to the region in both cases. The
distance is even greater when the MERCOSUR countries are excluded from the
analysis.
It is also worth mentioning that the ‘ALADI Nine’ countries (including Brazil) now
represent 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 in
Chapter 73 – as we will see – indicating that the differences in terms of scale of
production, along with a set of macroeconomic factors, give China a major competitive
differential, particularly in the sectors with higher value added.
In parallel, Brazilian exports of these products to ALADI countries are more important
for maintaining the productive performance of the Brazilian steel industry than they are
for the Chinese case, where ALADI’s share, although growing, is still relatively low.

Table 9
Main 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 clad
Year 2003 2004 2005 2006 2007
Country US$ US$ US$ US$ US$
Argentina 0 0 32,977 0 9,181,607
Brazil 0 0 0 19,257,762 117,686,700
Chile 0 208 0 25,757,616 46,723,989
Colombia 0 0 907,627 7,118,077 27,103,663
Cuba 0 574,277 6,474,297 1,144,281 5,418,589
Ecuador 0 0 0 13,908,123 16,169,752
Mexico 0 27,061,864 22,531,276 90,086,855 12,353,011
Paraguay 0 0 0 0 139,984
Peru 0 0 4,109 52,305,935 38,208,501
Venezuela 0 0 0 1,788,321 45,613,492
Total 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 10
Chinese exports to ALADI countries
Position 7209 Flat-roll iron and non-alloy steel n/un600mm wd cold-rolled, not clad
Year: 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

16
Mexico 0 6,537,219 171,111 17,372,721 7,081,083
Peru 0 0 15,747 2,625,943 27,842,734
Venezuela 0 0 0 1,966,172 0
Total ALADI 162,136 7,638,223 1,236,420 29,840,403 75,490,040
World 90,142,617 334,081,791 385,073,710 906,955,573 1,115,468,097
% ALADI 0.18% 2.29% 0.32% 3.29% 6.77%
Source: Comtrade/UN

Table 11
Brazilian exports to ALADI countries
Position 7208 Flat-roll iron and non-alloy steel n/un600mm wd hot-rolled, not clad
Year: 2003 2004 2005 2006 2007
Country US$ US$ US$ US$ US$
Argentina 28.268.404 59,766,245 56,952,166 65,885,319 104,884,773
Bolivia 3.882.690 7,031,340 5,128,680 9,675,514 8,388,565
Chile 44,259,604 89,828,895 58,089,832 92,647,018 97,347,108
Colombia 16,618,416 59,762,708 96,107,572 149,674,592 72,424,642
Cuba 2,022 0 0 0 42,697
Ecuador 6,787,579 8,856,917 5,714,085 30,106,840 29,210,746
Mexico 23,748,262 71,521,390 58,367,640 67,876,327 28,328,459
Paraguay 2,185,579 4,135,850 3,124,333 8,199,220 9,323,382
Peru 2,303,400 4,875,513 1,175,303 2,364,686 2,606,528
Uruguay 1,830,356 3,931,653 4,277,282 3,734,152 3,434,961
Venezuela 1,990,500 10,793,141 15,817,408 65,032,863 41,662,690
Total ALADI 131,876,812 320,503,652 304,754,301 495,196,531 397,654,551
World 433,808,787 766,377,752 785,610,996 1,054,351,262 748,780,632
% ALADI 30.40% 41.82% 38.79% 46.97% 53.11%
Source: Comtrade/UN

Table 12
Brazilian Exports to ALADI countries
Position 7209 Flat-roll iron and non-alloy steel n/un600mm wd cold-rolled, no clad
Year 2003 2004 2005 2006 2007
País US$ US$ US$ US$ US$
Argentina 272,743 749,259 970,556 3,412,787 10,863,795
Bolivia 1,427,320 3,286,951 5,383,355 6,268,008 3,492,591
Chile 4,746,174 12,168,498 10,500,442 9,988,241 17,339,260
Colombia 4,213,093 2,862,127 2,978,415 8,500,953 4,627,743
Ecuador 69,057 46,646 1,141,176 3,412,627 3,923,804
Mexico 1,409,625 9,740,154 7,994,265 14,713,905 2,839,629
Paraguay 1,314,093 1,883,403 1,607,253 553,971 758,651
Peru 735,056 2,340 25,447 1,164,577 712,714
Uruguay 1,140,543 1,537,915 1,309,256 1,006,357 1,166,746
Venezuela 0 0 550 0 22,380
Total ALADI 15,327,704 32,277,293 31,910,715 49,021,426 45,747,313
World 239,532,468 270,396,748 424,160,569 419,203,770 322,044,500
% ALADI 6.40% 11.94% 7.52% 11.69% 14.21%
Source: Comtrade/UN

17
Figure 14
Brazilian and Chinese exports to ALADI
(excl. Brazil): Position 7208
600
500
400

US$ M
300
200
100
-
2003 2004 2005 2006 2007

China Brazil

Source: Comtrade/UN

Figure 15
Brazilian and Chinese exports to ALADI
(excl. Brazil): Position 7209
60
50
40
US$ M

30
20
10
-
2003 2004 2005 2006 2007
China Brazil

Source: Comtrade/UN
Secondly, Brazil has also been displaced from the Chinese market in the segments of
higher added value in Chapter 72, such as positions 7208 and 7209, losing ground to the
leaders (Japan and South Korea), as well as other to Asian countries and Russia.

Figure 16
World Chinese imports
4000 3,583 70%
60.38%
60%
3000 50%
48.95%
US$ M

40%
2000 1,497 30%
15.48%
1000 20%
77 9.52% 240 10%
0 0%
2003 2007

7201 7208 % - Brazil

Source: Comtrade/UN

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

18
during this period, which reflects the expansion of domestic production of rolled iron
and steel products. Furthermore, as already mentioned, a trend of regionalization of
suppliers can be seen in this type of product, in which Japan tops the list of main
suppliers 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 these
products. In other words, China tends to manage the supply chain of steel, externalizing
the links with lower added value and maintaining the most advanced segments of the
chain through domestic production and decreasing foreign supply, based on fewer
countries with a high level of competitiveness and product quality.
With regard to competition in the supply of iron ore and manufactured products from
Latin American countries, this is marginal; Mexico and Venezuela are Brazil’s main
competitors in the supply of semi-manufactured products (position 7207), and Mexico
and Argentina are the main competitors in rolled steel and iron products (position
7209).19
In the case of Chapter 73, these trends towards ‘primarization’ of Brazilian exports to
China appear even more strongly. Here the volumes exported are practically nil, while
imports of iron and steel articles from China are on the rise. In 2007, Brazilian imports
from China, under this chapter, reached the US$ 300M mark, having risen from a value
close to zero in 1998. We stress, however, that this represents only18% of Brazilian
imports for this chapter.

Figure 17
Trade flow Brazil–China
Chapter 73: Articles of iron & steel
400
300
200
US$ M

100
0
-100 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
-200
-300
-400

Export Import Trade Balance

Source: Aliceweb, MDIC

19
For further details see Annex I.

19
Figure 18
Sum of the most imported NCMs of Chapter 73 by Brazil from China
Main imported products of selected positions 1998-2007

70.93
80 65.57
60.94 56.05
70
60
US$ M

50
40
19.27
30
20
10
-
73043990 73089090 73151210 73181500 73239300

20
Source: Aliceweb, MDIC
Even though Brazil does not export higher value-added goods to China in the steel
productive chain, nothing prevents this from happening when the destinations are the
ALADI 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 in
imports from China has been observed.
Figure 19 shows several important findings, some of which have already been pointed
out for Chapter 72 but which appear here in a more obvious manner. First, Brazil has
been overtaken by China in three of the five 4-digit positions analyzed (7304, 7308 and
7318) 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 Latin
American market. It is also worth mentioning that China had already overtaken Brazil
in the value of exports to Argentina in at least three positions (7304, 7315 and 7323) by
2007.
Another noteworthy factor is that while Chinese exports to ALADI countries represent
between 2% and 10% of total worldwide sales of these positions by China, Brazilian
Chapter 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 (see
Annex I).

20
73043990: Tubes, pipes and hollow profiles (excl. of 7304.10-7304.31), seamless, of circular cross
section, of iron (excl. cast iron)/non-alloy steel)
73089090: Structures (excld. prefabricated buildings of heading 94.06) and parts of structures (eg. bridges
and bridge-sections, lock-gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and
their frames and thresholds for doors, shutters, balustrades, pillars and columns) of iron/steel (excl. of
7308.10-7308.40); plates, rods, angles, shapes, sections,tubes and the like, prepared for use in structures,
of iron/steel
73151210: 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, of
iron/steel
73239300: Table/kitchen/other household articles and parts thereof (excl. of 7323.10), of stainless steel.

20
Figure 19
Main exported positions from Brazil and China to ALADI countries
(excl. Brazil)
120
100
80
US$ M

60
40
20
-
2003 2007 2003 2007
Brazil China

7304 7308 7315 7318 7323

Source: Comtrade/UN and Aliceweb/MDIC


Note: Long steel products (7304 - Tube or hollow profile, seamless iron/steel not cast) and articles of
iron 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 and
7323 - Table, kitchen, household items of iron or steel nes)

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

Overall the analysis of Chinese steel exports (Chapters 72 and 73) to the United States
and 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 only
products of the steel chain but also products manufactured by industrial consumers of
steel (as indicated in iron and steel chain diagram). Thus the trade data presented in the
tables 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

21
Figure 20

Brazilian and Chinese steel products


exported to the US (Chapter 72)
3000
(Value in US$)
2,631.20 2,553.30
2500
US$ million 2,528.70
2,160.70
2000 2,198.10
1,859.00
1500
1,124.60
1000 1,020.60 1,074.60

500
224.4
0
2003 2004 2005 2006 2007
China Brazil

Source: Comtrade/UN

Figure 21

Brazilian and Chinese steel products


exported to the US (Chapter 72)
(Volume in tons)
8,000.00
6,802.50
7,000.00 7,367.00
7,468.60
6,000.00
5,291.80
5,000.00 5,576.20
6
t
10 4,000.00
3,000.00
2,160.70 2,631.20
2,000.00 2,553.30 2,528.70

1,000.00 1,020.60
0.00
2003 2004 2005 2006 2007

China Brazil

Source: Comtrade/UN

Figure 22 Figure 23
Main steel products exported to the US by China, 2007 Main steel products exported to the US by Brazil, 2007
10.55% 19.89%
3.19% 7.71%
20.53% 18.94%
45.66%

16.69%
7.81%
49.03%
Ferro-alloys (7202 HS-position) Pig iron (7201 HS-position)
Ferro-alloys (7202 HS-Position)
Flat steel (7209, 7210 and 7219 HS-positions) Semi-finished products (7207 HS-Products)
Source: Comtrade/UN
Long steel (7213, 7217 and 7228 HS-positions) Flat steel
Long steel (7213 HS-Position)
Others Others

Source: Comtrade/UN

22
In Chapter 72, which concentrates most of the products of the steel industry, the
Chinese market share increased from 2.19% (2003) to 8.35% (2007) in the US (Table
13). 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 market
share in the total imports by the U.S. decreased slightly between 2005 and 2007.

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

Table 14
Brazilian and Chinese steel products exported to the US
Chapter 73: Articles of iron and steel
(US$ M) Market share (%)
Countries 2003 2005 2007 2003 2005 2007
China 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 market
share increased by around 10% in the period observed, reaching 32.04% in 2007 (Table
14). Brazil’s exports to the US are marginal, reaching around 1% of total US imports.

Figure 24 Figure 25
Main steel products exported to the EU by Brazil in 2007 Main steel products exported to the
(Chapter 73) EU by China in 2007 (Chapter 73)
18.57%
29.15 27.4
% 6%

50.00%
Source: Comtrade/UN
31.43%
43.40
Long products (7304, 7305, 7306 and 7307 HS positions) %
Long products (7304, 7306 and 7307 HS positions)
Iron and steel finished products (7318 and 7326 HS positions) Iron and steel finished products (7308, 7317 and 7318, 7323 and 7326 HS positions)
Others Others

Source: Comtrade/UN

23
Among the main suppliers of steel products to the European market, China was the
country that has had the highest growth rates since 2003. Its market share increased
from 2.3% in 2003 to 17.5% in 2007. In the same period Brazil increased its exports to
the European bloc, but reduced its share in total imports, indicating trade diversion.

Table 15
Brazilian and Chinese steel products imported by European Union
Chapter 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)
12,000.00
10,000.00
9,731.29
U S $ m illion

8,000.00
6,000.00
4,300.21
4,000.00
2,000.00 1,583.72
843.10 2,331.79
1,381.63
- 305.75
2003 2004 2005 2006 2007

C hina Braz il

Source: Comtrade/UN

Figure 27

European Union imports of steel products


(Volume - Chapter 72)
12,000.00

10,000.00 10,818.19

8,000.00
t 5,851.76
610 6,000.00

4,000.00
2,223.81
1,539.23 2,395.26
2,000.00 2,874.98
528.61 1,051.58
-
2003 2004 2005 2006 2007
China Brazil

Source: Comtrade/UN

24
In the case of European imports of steel products from Chapter 72, China concentrates
its exports on high value added products (flat and long steel products) while raw
materials and semi-finished products comprise around 50% of Brazilian exports to
Europe. 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 the
United States.

Figure 28 Figure 29
Main steel products imported from China in 2007 Main steel products imported from Brazil in 2007
7.71% 8.97%
21.12% 19.95%
18.97%

.
8.41%

62.76% 31.10%
21.00%

Ferro-alloys Flat steel (7208, 7210 and 7219 HS-positions) Pig iron Ferro-alloys
Semi-finished products Flat steel (7208, 7209 and 7210 HS-positions)
Long steel 07213 HS-position) Others Others

Source: Comtrade/UN

The Chinese market share of finished steel products increased from 24.1% in 2003 to
36.9% in 2007. Brazil kept its marginal share of total European imports.

Table 16
Brazilian and Chinese steel products imported by European Union
Chapter 73: Articles of iron and steel
(US$ M) Market share (%)
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, the
steel industry is a sector historically marked by protectionism. In this sector, non-tariff

25
barriers and other measures such as antidumping, safeguard and countervailing
measures are more significant than tariffs.

Figure 30 Figure 31
Tariffs on EU imports of mining and steel Tariffs on US imports of mining and steel
products (average ad valorem duties %) products (average ad valorem duties %)
4 3
3.69 2.78
3.5
2.5 2.7
3 2.88
2.31 2
2.5
1.69
2 1.5
1.8 1.27 1.28
1.5 1
1.14 0.8
1 0.5 c 0.8
0.5 0.01 0.3
0.28 0
0 0 0 0
1998 2002 2006
1998 2002 2006
Chapter 26 - Ores slag and ash Chapter 26 - Ores slag and ash
Chapter 72 - Iron and steel Chapter 72 - Iron and steel
Chapter 73 - Articles of iron and steel Chapter 73 - Articles of iron and steel

Source: World Trade Organization (WTO)

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

Figure 32 Figure 33
Tariffs on Brazilian imports of Mining and Steel Tariffs on Chinese imports of Mining and Steel
products (Average ad valorem duties %) products (Average ad valorem duties %)
20 14
18.34 13.11
16.67 12
10.45
15 15.05 10.12
13.7 10
12.16 8.71
10.61 8
10
5.6
6
5.8 5.04
5 4.4 4
2.89 1.85 1.44
2 1.44
0
0
1998 2002 2006
1998 2002 2006
Chapter 26 - Ores slag and ash Chapter 26 - Ores slag and ash
Chapter 72 - Iron and steel Chapter 72 - Iron and steel
Chapter 73 - Articles of iron and steel Chapter 73 - Articles of iron and steel

Source: WTO (World Trade Organization)

In the case of Brazil and China a tariff escalation21 can be noticed among the different
stages 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 raw
materials. For example, in Chapter 73 (Articles of Iron and Steel), in which the high
value added products are listed, there are tariff peaks that reach between 20-30% for
both countries.

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

26
4. Trade patterns, investment profiles and outlook for the mining/steel productive
chain in Brazil
One can therefore conclude that the pattern of trade relations between Brazil and China
has contributed to the gestation of a new production and marketing dynamic in this
sector, 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 a
consolidation of trade surpluses in the initial links and a sharp reversal in Chapter 73
starting in 2006, the year when the negative trade balance first appeared. Nonetheless,
this is still low when compared to the sector’s volume of production on the domestic
market.

Figure 34
Brazil´s total trade balance, Chapters 26 and 72
12
10
8
US$ bn

6
4
2
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Chapter 26 Chapter 72

Figure 35
Brazil´s total trade balance, Chapter 73
300

200
US$ M

100

-100 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

-200

-300

Chapter 73

Source: Aliceweb/MDIC

The main features of the new commercial and productive dynamic of the iron ore/steel
productive chain, derived from the foregoing analysis, are the following:
• Expansion and concentration of Brazilian exports in iron ore and growing
‘primarization’ of exports of semi-manufactured products;

27
• Imports of steel products with higher value added originating from China,
although its rate of penetration on the Brazilian domestic market is still quite
low;
• Limits to the exports of steel products with higher value added to the major
world markets;
• Trend toward the concentration of Brazilian exports of steel products with
higher value added in Latin American markets, where Brazil already faces
strong competition from China, both inside and outside MERCOSUR.
The trade pattern established with China has been decisive to the change in the profile
of international insertion of the Brazilian mining/steel sector.
If, on the one hand, the trends of ‘primarization’ of Brazilian exports should not
necessarily expel companies that produce higher added value from the domestic market,
they do however indicate a pattern of investments that should lead to an increasing
specialization 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 with
diversification of exports, neither is a scenario of stagnant production and exports
expected – much to the contrary. This will obviously depend on the dynamism of the
global economy, but also the domestic economy, after the effects of the financial crisis
are at least partially overcome and the commodity market returns to a more stable
situation.
Since the beginning of this decade Brazil has remained in ninth place as a producer of
crude steel, accounting for 2.5% of worldwide production in 2007. Despite the trends
diagnosed in this study, the investments foreseen are expected to make Brazil’s
production capacity jump from 33 million to 59 million tons of steel between 2007 and
2012 (Instituto Brasileiro de Siderurgia, 2008).
The impacts of the rise of China – which accounts for 40% of world production of crude
steel – along with the effects of the commodity markets on the rise as well as the
internal combination of low exchange rates, high interest rates, and a modest industrial
policy that prevailed until 2007, indicate a trend of strengthening the sector based on the
less intensive links in technology, and Brazil’s taking advantage of the benefits in terms
of natural resources.
In fact, a trend for increasing specialization and greater openness in the sector can be
seen, 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 major
companies in the sector: Vale (CVRD) and Gerdau.
Gerdau, a Brazilian steel company specializing in long steel, was a pioneer in the
process of internationalization that began in 1980. Currently, more than half of its
installed capacity of 25 million tons is located outside Brazil, with an emphasis on
North America. Its strategy of internationalization was initiated in order to circumvent
tariff barriers and other restrictions imposed by countries with large markets such as the
United States. With the consolidation of the steel industry worldwide, the Gerdau group
began 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

28
taking advantage of the increase in consumption resulting from economic growth in
such regions (Valor Econômico, 2007b).
Vale’s process of internationalization coincided with the expansion of the Chinese
demand for ores and the rise in prices due to the decline in stocks of commodities at the
beginning of the decade. Because of this scenario, its strategy of world
internationalization was guided mainly by the combination of a portfolio of high-quality
mineral reserves, geographic diversification, reduction in the cost of capital and an
aggressive pricing profile. The high point of Vale’s internationalization process
occurred in 2006 with the acquisition of Inco, a Canadian mining company,
transforming Vale into the world’s second largest mining corporation. Before that, Vale
had made acquisitions in Europe and forged partnerships in China.
One differentiating element between the Vale strategy and Gerdau’s strategy is the
importance of the strategic alliances with foreign companies that Vale has undertaken.
These generally involve agreements to shareholder participation in steel companies that
already belong to Vale’s customer portfolio. In return, the supply of iron ore is assured
to these companies, thus constituting a minimum and concrete volume of future demand
for the product offered by Vale (Valor Econômico, 2007c).
Thus Vale has created a customer portfolio abroad that, by having Vale itself as a
minority or even majority shareholder, is less prone to sign agreements with its
competitors. 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, where
the iron ore would be supplied by Vale itself. It is worth mentioning that as part of this
same strategy, Vale owns ferro-alloy producing plants in Europe (wholly-owned
subsidiaries in Norway, France and Germany) which use manganese originating from
Carajas, Pará.
This investment in processing abroad while Brazil accounted for the export of basic raw
material does not coincide with the interests of the Brazilian State. Although Vale is no
longer a state-owned company, the Brazilian government is still a significant
shareholder and one of the company’s foremost providers of capitalization. President
Lula publicly and repeatedly demanded investment in Vale in Brazil, especially for the
steel industry, in a clear attempt to break Vale’s profile as an exporter of basic raw
materials.
As a result, two joint ventures were formed with Vale’s major global customers for the
construction of steel mills in Brazil, involving the supply of iron ore by Vale not only
for the Brazilian plants but also for other units located abroad, owned by each of the
participating groups: Companhia Siderúrgica do Atlântico (CSA) in Rio de Janeiro,
Germany-based ThyssenKrup and Companhia Siderúrgica de Pecém in Ceará, and
South Korea-based Dongkuk (Vale, 2008).
The bulk of the production from Vale’s iron and steelmaking complex in Brazil is
intended for export to the partner companies themselves, since steel plates will be
produced in the crude state (i.e. without further processing, such as galvanization) and
also for Latin American countries.
This confirms the hypothesis that the strategies of internationalization of major
Brazilian companies in this sector will tend – whether by the acquisition of plants to
meet 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

29
reinforce a profile of productive specialization based in the segments with less added
value.
This hypothesis is reinforced by the internationalization strategies of Chinese
companies, which are making external investments in logistics and distribution of iron
ore or in building plants situated at the top of the production chain, as shown in Table
17 below.

30
Table 17: Internationalization Strategies of Chinese Companies in Brazil

Company Established Location Activities


China Metais 1999 Rio de Janeiro The company will develop and fit out a 450 m3 oven
Minerals Ltda /RJ for the Brazilian Cosipar in a project evaluated at
(China 27.4M Euros (US$ 42.2M). The Chinese company has
Minmetals) previously equipped the steel production plant of
Brazilian Gerdau Açominas, which provided a return
of 182.6M Euros (US$ 281.2M). China Minmetals
profited by 680M Euros (US$ 1.047bn) in 2007, twice
its 2006 profits, and it plans to invest US$ 2bn in
Brazilian copper and aluminium production.
Sinosteel Br. – Rio de Janeiro The second biggest iron ore importer in China, this
Metalúrgica /RJ company provides materials and services to Chinese
Ltda. companies and intends to establish partnerships with
Brazilian companies to explore iron ore in Brazil. The
main targets are small companies in northeastern and
northern states such as Bahia and Amapá.
Source:Own production based on Valor Econômico

31
References
Barbosa, Alexandre de Freitas and Mendes, Ricardo Camargo. 2006. ‘Dialogue on Globalization Briefing
Papers ‘Economic Relations between Brazil and China: A Difficult Relationship’. Bonn: Friedrich Ebert
Stiftung.
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 expansão
da produção. Rio de Janeiro
Instituto Observatório Social. 2008. ‘A Economia Brasileira pós-Ascensão Chinesa: Análise Setorial do
Padrão de Comércio, dos Impactos sobre o Emprego e das Novas Estratégias Empresariais’. São Paulo:
Instituto Observatório Social, BGB Bildungswerk.
Lo, Dic. 2006. ‘Making Sense of China’s Economic Transformation’. London: Department of Economics,
School of Oriental and African Studies, University of London.
Rosseti, Pedro de A. and Fernandes, Patrícia D. 2005. ‘Para Onde Vai a China?
O impacto do crescimento chinês na siderurgia brasileira.’ Rio de Janeiro: BNDES Setorial.
Vale, 2008, Relação com investidores da Vale. Available at www.vale.com (in Portuguese). Retrieved on
16 December 2008.
Valor Econômico. 2006a. ‘Avanço da China é preocupaçao mundial’, 20 December 2006.
—— 2007a. ‘Setor que o Brasil na OMC contra a China’, 30 May 2007
—— 2007b. ‘Com Chaparral, Gerdau produzirá mais aço nos EUA do que no Brasil’, 12 July 2007
—— 2007c. ‘Vale avança no caminho da internacionalização’, 28 June 2007.

32
ANNEX I: Iron and steel sector
Table A1
Main share of Chinese suppliers of selected positions 2003
Chapter 72: Suppliers
Code 7201
Country 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
Country Value US$ Kg % share
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
Country Value US$ Kg % share
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
Country Value US$ Kg % share
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 720712
24
Mexico and Argentina compete with Brazil, especially in subposition 720917

33
Table A2
Chinese suppliers of Chapter 72 products 2005
Code 7201
Country Value US$ Kg % share
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
Country Value US$ Kg % share
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
Country Value US$ Kg % share
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
Country Value US$ Kg % share
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%
Other Countries - Asia 251,464,395 474,040,152 9.21%
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
Country Value US$ Kg % share
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)

34
Table A3
Chinese suppliers of Chapter 72 products 2007
Code 7201
Country 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
Country Value US$ Kg % share
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
Country Value US$ Kg % share
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
Country Value US$ Kg % share
Japan 903,577,756 1,402,473,383 60.38%
South Korea 225,144,389 319,308,928 15.04%
Other Countries - Asia 173,092,652 315,438,746 11.57%
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
Country Value US$ Kg % share
Japan 805,244,834 1,151,384,587 31.99%
South Korea 748,700,361 1,103,162,671 29.75%
Other Countries - Asia 626,786,460 960,980,097 24.90%
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
Country Value US$ Kg % share
Japan 1,808,627,960 2,231,000,936 50.40%
South Korea 896,771,182 1,148,904,824 24.99%
Other Countries - Asia 637,411,788 798,658,539 17.76%
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%

35
Chinese exports to third markets of the most significant products exported from China to
Brazil

Table A4
Chinese exports to ALADI countries
Position 7304 Ferrous waste and scrap, remelt scrap iron/steel ingot
Year 2003 2004 2005 2006 2007
Country US$ US$ US$ US$ US$
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 29,360
Venezuela 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-ALADI
Base 100 = 2003 100.00 331.15 784.23 1,984.34 3,850.68

Table A5
Brazilian Exports to ALADI countries
Position 7304 Tubes, pipes etc, seamless, iron nesoi and steel
Year 2003 2004 2005 2006 2007
Country 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 1,055,483 400,392
Venezuela 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-ALADI
Base 100 =2003 100.00 117.92 246.43 354.03 273.94

36
Table A6
Chinese exports to ALADI countries
Position 7308 Structures nesoi and parts thereof, of iron or steel
Year 2003 2004 2005 2006 2007
Country US$ US$ US$ US$ US$
Argentina 32,722 111,731 496,038 1,884,203 4,393,297
Bolivia 50,994 11,463 1,505 27,483 618,654
Brazil 1,276,490 4,626,733 6,021,650 72,781,079 34,450,199
Chile 482,679 1,985,028 2,810,973 6,048,853 8,924,344
Colombia 200,962 340,600 762,977 1,999,978 6,989,916
Cuba 634,080 541,228 870,340 1,247,762 1,742,792
Ecuador 450,123 656,755 3,888,545 1,132,614 11,199,871
Mexico 810,175 1,368,403 5,687,192 8,444,009 17,260,224
Paraguay 0 0 0 26,441 125,332
Peru 178,783 266,056 563,569 1,415,827 4,717,112
Uruguay 21,150 97,375 151,730 668,972 39,277
Venezuela 101,941 348,290 1,055,164 1,799,461 20,325,243
Total ALADI 4,240,099 10,353,662 22,309,683 97,476,682 110,786,261
World 1,075,103,944 1,582,345,685 2,565,514,364 3,982,633,630 6,200,418,420
% ALADI 0.39% 0.65% 0.87% 2.45% 1.79%
Base 100 = 2003 100.00 244.18 526.16 2,298.92 2,612.82

Table A7
Brazilian exports to ALADI countries
Position 7308 Structures nesoi and parts thereof, of iron or steel
Year 2003 2004 2005 2006 2007
Country US$ US$ US$ US$ US$
Argentina 1,731,433 7,006,501 9,162,535 12,672,042 20,658,003
Bolivia 334,266 7,728,046 4,132,766 3,523,949 2,006,595
Chile 9,458,920 8,528,381 23,318,550 7,530,727 8,953,134
Colombia 131,321 200,048 266,782 1,062,243 69,760
Cuba 2,400 266,990 739,323 325,157 580,421
Ecuador 286,617 628,258 10,850,533 694,700 69,423
Mexico 2,924,902 14,730,233 2,245,414 250,359 145,925
Paraguay 1,941,520 962,305 2,767,570 1,359,944 1,239,657
Peru 1,357,462 459,166 790,425 220,258 3,939,374
Uruguay 728,409 4,857,036 4,919,477 11,548,459 6,090,162
Venezuela 17,983,444 38,379,292 7,721,269 5,303,604 12,316,919
Total ALADI 36,880,694 83,746,256 66,914,644 44,491,442 56,069,373
World 50,368,698 107,733,699 117,742,649 80,138,126 83,438,440
% ALADI 73.22% 77.73% 56.83% 55.52% 67.20%
Base 100 = 2003 100.00 227.07 181.44 120.64 152.03

37
Table A8
Chinese exports to ALADI countries
Position 7315 Chain and parts, of iron or steel
Year 2003 2004 2005 2006 2007
Country US$ US$ US$ US$ US$
Argentina 2,443,615 3,816,277 4,252,754 4,134,782 6,655,714
Bolivia 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 74,289,149
World 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
Country US$ US$ US$ US$ US$
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

38
Table A10
Chinese exports to ALADI countries
Position 7318 Screws, bolts, nuts, washers etc, iron or steel
Year 2003 2004 2005 2006 2007
Country US$ US$ US$ US$ US$
Argentina 1,110,130 2,363,396 4,798,366 6,894,089 12,172,976
Bolivia 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 94,030,922 137,748,000
World 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
Country US$ US$ US$ US$ US$
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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Table A12
Chinese exports to ALADI countries
Position 7323 Household articles and parts, iron and st, ir or steel wool etc
Year 2003 2004 2005 2006 2007
Country US$ US$ US$ US$ US$
Argentina 2,701,439 2,842,400 3,871,895 6,426,479 5,735,971
Bolivia 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 90,132,682
World 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
Country US$ US$ US$ US$ US$
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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