Cuadernos de trabajo del CECHIMEX. Economic Relations ......An Overview of the Brazilian and Chinese Steel and Iron Industries 2.1 World Mining/Steel Production and Trade ... Australia

Universidad Nacional Autónoma de México

Facultad de Economía

Centro de Estudios China-México

Número 3, 2010

Economic Relations between Brazil and China in

the Mining/Steel Sectors

Alexandre Barbosa and

Débora Miura Guimarães

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Universidad Nacional Autónoma de México

Dr. José Narro Robles Rector Dr. Sergio M. Alcocer Martínez Secretario GeneralLic. Enrique del Val Blanco Secretario Administrativo Mtro. Javier de la Fuente Hernández Secretario de Desarrollo Institucional M.C. Ramiro Jesús Sandoval Secretaria de Servicios a la Comunidad Lic. Luis Raúl González Pérez Abogado General

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Economic Relations between Brazil and China in the Mining/Steel Sectors1

Alexandre Barbosa and Débora Miura Guimarães2

Resumen

Este estudio analiza las relaciones económicas entre Brasil y China a través de una aproximación sectorial. En primer lugar se presenta una descripción general de las industrias del hierro y del acero en ambos países, acentuando su contexto histórico, el desarrollo del sector acerero y el funcionamiento de su estructura productiva. En la siguiente sección se analiza la dinámica del comercio y de la inversión para determinar el impacto que la expansión china está ejerciendo en los sectores del hierro y del acero brasileño. El estudio concluye destacando las tendencias princi-pales en el mediano plazo para la relación económica Brasil-China en las industrias estudiadas.

Palabras clave: industria del acero, industria del hierro, inversión, relación comercial Brasil y China.

摘要本文通过行业视角来分析巴西与中国的双边经济关系。作者首先对两国的钢铁行业进行了总体概述，强调了其历史背景、钢铁行业的发展及生产结构的作用等。接下来，本文分析了贸易和投资的作用，以评估中国的扩张对巴西钢铁行业正在造成的冲击。在结论部分，本文指出了巴中双边在钢铁行业方面经济关系的中期走势。

关键词：铁矿石钢铁中国巴西投资贸易

Abstract

This study analyses the economic relations between Brazil and China through a sectorial ap-proach. It first presents a general overview of the iron and steel industries of both countries, emphasizing their historical context, the development of the steel industry and the workings of their productive structure. In the following section, the study analyzes the dynamics of trade and investment in order to assess the impact that Chinese expansion is exerting on the Brazilian iron and steel industry. Concluding, the study highlights the main trends in the medium term for the Brazilian-Chinese economic relationship in the iron and steel industry.

Keywords: Iron and steel industry; investment; brazilian-chinese commercial relationship.

1 This paper was prepared as part of a research project on “The Impacts of China’s Global Expansion on Latin America” coordinated by Professor Rhys Jenkins of the University of East Anglia which was funded by the World Economy and Finance research programme of the UK Economic and Social Research Council (Grant No. RES-165-25-005).

2 Alexandre de Freitas Barbosa is an economist and holds a Ph.D. in Applied Economics from State University of Campinas (UNICAMP) and an MA in Economic History from the State University of Sao Paulo (USP). In recent years, he has conducted studies on the external insertion of the Brazilian economy, as a consultant of Prospectiva Consultoria.Debora Miura Guimarães holds a Bachelors Degree in International Relations from the Pontifícia Universidade Católica de São Paulo (PUC-SP) and a Master in European Communities and European Union at the Royal Institute of European Studies, Zaragoza, Spain. Her areas of specialization are trade and investment policies and strategic plan-ning based on free trade agreements.

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Contents

Introduction ...................................................................................................................................... 5

1. Methodological Introduction ..................................................................................................... 5

2. An Overview of the Brazilian and Chinese Steel and Iron Industries .................................. 6 2.1 World Mining/Steel Production and Trade ...................................................................... 6 2.2 Iron and Steel Production Chain ...................................................................................... 8 2.3 The Brazilian Iron Ore Market......................................................................................... 8 2.4 Brazil’s Steel Industry ........................................................................................................ 9 2.5 The Chinese Iron Ore Market ......................................................................................... 10 2.6 China’s Steel Industry .......................................................................................................11

3. The Dynamics of Trade and Investment ................................................................................ 12 3.1 Bilateral Trade and its Impact on the Region .................................................................. 12 3.2 Chinese Access to Developed Markets: United States and the European Union ......... 20 3.3TariffProfileintheMining/SteelSector ........................................................................... 27

4. TradePatterns,InvestmentProfilesandOutlookfortheMining/Steel Production Chain in Brazil ...................................................................................................... 29

Bibliography ................................................................................................................................... 32

Annex I: Iron and Steel Sector ...................................................................................................... 33

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Introduction

This study is intended to complement the more general analysis of 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 historical context, the development of their steel industry and how their produc-tive 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 impact 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 these trade dynamics tend to influence investment decisions as well as the evolution and profile of Brazilian production.

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), namely 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 evi-dence of trade diversion and to supplement the bilateral trade mapping.

Based on the mapping of the main NCM codes and positions that Brazil exports to 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 trade data organization method, three major patterns of trade flow behavior were identified: 1) growth of Chinese exports and Brazilian exports to ALADI countries; 2) growth of Chinese exports and decrease of Brazilian exports to ALADI countries (Tables 1); and 3) growth of Chinese exports to ALADI countries and to Brazil with marginal presence of Brazilian exports to ALADI countries.

Table 1: Patternsoftradeflowbehaviorin China and Brazil in relation to ALADISector Position Description Pattern

Iron and steel

7202 Ferroalloys. ++7318 Screws, bolts, nuts, washers etc, iron or steel. ++

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

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

7209 Flat-rolled products of iron or non-alloy steel of 600 mm width or more, cold-rolled (cold-reduced), not clad, plated or coated. +-

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

7308 Structures and parts thereof, of iron or steel. +-7315 Chain and parts, of iron or steel. +-

Source: National Department of Mineral Production Brazil++: Growth of Chinese exports/growth of Brazilian exports+-: Growth of Chinese exports/decrease in Brazilian exports+: Growth of Chinese exports/marginal Brazilian exports

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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

CountriesReserves Production

2007Billion t (e) % Million t (e) %

Brazil 33,233 9.8 354,674 22.0South Africa 2,300 0.7 40,000 2.5Australia 45,000 13.2 320,000 16.8Canada 3,900 1.1 33,000 1.7China 46,000 13.5 600,000 31.6United States 15,000 4.4 52,000 2.7India 9,800 2.9 160,000 8.4Russia 56,000 16.5 110,000 5.8Ukraine 68,000 20.0 78,000 4.1Other 60,767 17.9 154,326 8.1Total 340,000 100 1,600,000 100Source: 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 iron ore reserves account for 340 billion tons, highlighting Ukraine (20% of reserves), Russia (16.5%), China (13.5%), Australia (13.2%) and Brazil (9.8%).

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), overtaking Australia. China remains the largest importer, accounting for 41% or 383 million tons of the world’s iron ore imports in 2007.

Figure 1World crude steel production

Source: World Steel Association, (formerly IISI)

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World production of crude steel in 20073 reached 1.34 billion tons, a 7.5% growth 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 the same period world production excluding China rose by 2.8% per year.



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

Thanks to the steel industry’s privatization around the world, a series of mergers and acquisitions have resulted in the con-solidation 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 production.4 The business logic of the largest companies indicates that production of pig iron and semi-finished products5 should be located near to raw material suppliers while the production of cold-rolled steel (high value added products) should be carried out in the consumer markets.

Compliance with environmental agreements is forcing developed countries to close down inefficient and polluting steel com-panies, directing the “hot part” of production to countries that are not committed to reducing emissions of greenhouse gases, such as Brazil and China.

3 International Iron and Steel Institute data.4 Para onde vai a China? O impacto do crescimento chinês na siderurgia brasileira. BNDES Setorial, Rio de Janeiro, 2005.5 This is regarded as the ‘hot part’ of the production because it involves chemical processes within the steel production (reduction, refining and ingot casting).

Figure 3Market share of the main steel producers in 2007

Figure 2World crude steel production

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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 pro-duction of semi-finished and rolled products. The main raw materials used by the 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 iron ore and steel chain product classification is based on the correspondence between two clas-sification 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. The states of Minas Gerais (72%) and Pará (26%) were the main producers.

The production growth rate was very low until 2002 (around 2% per year). As of 2003, propelled by strong international demand, especially from China, the production growth rate reached 13.5% per year in 2007.

Source: DNPM

Figure 5Brazilian iron ore production

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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 around 119.1 million tons (an increase of 9.2% compared to the previous year)6.

The market structure of the mining sector is extremely concentrated. In Brazil, production by Vale and its joint-venture part-ners 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 destination of Brazilian exports (in US dollars), accounting for 35% of Brazilian iron ore exports. Other export destina-tions 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 35Japan 1,213 31,217,225 11Germany 927 24,281,183 9Italy 526 11,366,262 5France 484 13,229,359 5South Korea 365 10,321,006 3Others 3,333 74,007,284 32World Total 10,558 269,448,032 100Source: COMTRADE/UN

Taxes in the Mining Sector

Unlike India and China, Brazil does not tax the export of iron ore. On the contrary, there are government incentives for iron ore exports. In Brazil, mining companies are 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 in order 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 modernization and technological updating of mills. In 1999, the Brazilian steel output was 25 million tons per year. In 2007, it reached 32.9 million tons.7

Currently, the sector includes 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 steel trade) 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 northeast, aimed at exporting semi-finished goods.

6 Data from the National Department of Mineral Production (DNPM).7 Data from the Brazilian Steel Institute.

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2.5 The Chinese Iron Ore Market

Since 1990, Chinese demand for metal has grown by an average of 10% per year.8 Increasing iron ore import figures indicate that the exploration and expansion of existing mines in Chinese territory has not been sufficient to counterbalance the increase in demand and depletion of natural resources.

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 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) ensuring long-term contracts at set price levels.

Unlike the Brazilian market,9 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. 3,867 official statistics are mentioned,

8 Figures from Raw Material Group (RMG).9 The production of Vale and its joint-venture partners totaled 308,4 million tons (around 90% of domestic production).

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

Given that 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 causes concern mainly because Brazilian steel ex-ports 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 as manufacturers are close to the Brazilian iron ore. By 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 sub-sidizing its steel exports. Currently (February 2 2009) the matter is still in the consultation process at the WTO and the Brazilian government is watching and studying the case.

The application of import quotas is another defense mechanism that is used. The European Union and the United States are negotiating unilateral quotas for Chinese steel imports. Neither are satis-fied with the increase of Chinese exports, claiming that the products contain subsidies.

As a result, the Chinese government has recently made moves to contain steel exports. 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)

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

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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, medium ones 11%, small mines 17% and very small operations 27%.10

2.6 China’s Steel Industry

China’s growing demand for steel is a result of investments in infrastructure needed to modernize the country. In order to meet this demand, China announced the government’s Development Policy for the Steel Industry in 2005; its main objectives 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 compa-nies: Baosteel and Anshan Steel, producing over 10 million tons per year. In 2005, companies of the same size totaled ten. National policies seek to establish two groups of companies by 2010, each with the capacity to produce around 30 million tons per year.11

Table 4: China’s crude steel consumption 2001-2007

Million tons 2001 2002 2003 2004 2005 2006 2007

Consumption 169.8 205.7 258.6 296.6 355.6 388.3 434.4Production 151.0 182.3 222.3 282.9 355.8 422.9 489.2Net Imports 18.7 23.5 36.2 13.7 -0.2 -34.7 -54.9Source: 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 100 121.2 152.3 174.7 209.4 228.7 255.9 Production 100 120.7 147.2 187.3 235.6 280.1 323.9 Source: China Iron and Steel Association

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 production complexity of this kind of product.12

Since 2003 flat steel products (which were the main imported products) have received investment to increase production to meet demand. Such investment resulted in an increase of production capacity and import substitution in 2004.

10 Commodities Now – LME Week Supplement (26/9/2006)11 Commodities Now – LME Week Supplement (26/9/2006)12 Para onde vai a China? O impacto do crescimento chinês na siderurgia brasileira. BNDES Setorial, Rio de Janeiro, 2005.

Figure 7China’s total trade balance Chapter 72: Iron and steel

Source: Comtrade/UN

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Source: Comtrade/UN

3. The Dynamics of Trade and Investment

3.1 Bilateral Trade and its Impact on the Region

Brazilian iron ore sales to China increased nearly twentyfold between 1998 and 2007, reaching US$ 3.7 billion in 2007.13 Since the amount 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.

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

Source: Aliceweb, MDIC

13 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 said chapter.

Figure 8China’s total trade balance Chapter 72: Iron and steel

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

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In terms of participation in the Chinese market, Brazil appears as the second largest ore supplier, behind Australia. After gain-ing 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 18% last year. India was outstand-ing because of a more pronounced increase in ore exports than Brazil, elevating its position in the Chinese market, already coming in at 16.3% in 2007.

Table 6: Brazilian share in Chinese imports for Chapter 261998 2002 2007

Country US$ ‘thousand

Share% Country US$

thousandShare

% Country US$ thousand

Share%

Australia 867,615 37.9 Australia 1,261,668 29.5 Australia 13,943,018 25.8Brazil 289,192 12.6 Brazil 816,151 19.1 Brazil 9,661,97914 17.9India 228,567 9.9 India 626,102 14.6 India15 8,794,765 16.3South Africa 177,509 7.8 South Africa 286,050 6.7 Chile 3,367,901 6.2Chile 148,726 6.5 Chile 237,367 5.6 Peru 3,062,270 5.7Mongolia 122,697 5.4 Peru 236,505 5.5 Indonesia 2,085,449 3.9Peru 122,465 5.4 Mongolia 178,354 4.2 South Africa 1,925,932 3.6Canada 64,53 2.8 Canada 89,239 2.1 Mongolia 1,130,671 2.1Gabon 35,564 1.6 Iran 69,745 1.6 United States 1,067,928 1.9Iran 24,073 1.1 Indonesia 66,245 1.6 Canada 1,031,560 1.9Others 20,879 9.1 Others 413,293 9.6 Others 7,978,447 14.8Total-World 2,288,818 100 Total-World 4,280,721 100 Total-World 54,049,920 100Source: Comtrade/UN

14 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 which go through third countries; goods classified differently

etc). However, it may be that some of Brazil’s exports reach China through a third country, where China records them correctly as imported from Brazil. Imports through Hong

Kong and other Chinese territories may also distort data.

15 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.

Figure 10Brazilian exports to China

Iron ore: 2601 HS position(year base 100 = 1998)

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When considering the Brazilian share for position 2601, which is where the products exported by Brazil to China are concen-trated, the Brazilian share was 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 26011998 2002 2007

Country US$ million Share Country US$

million Share Country US$ Million Share

Australia 686.9 46.8 Australia 994.9 35.9 Australia 11,106.5 32.9Brazil 281.6 19.2 Brazil 801.8 28.9 Brazil 9,491.2 28.1India 187.2 12.8 India 557.3 20.1 India 7,834.9 23.2South Africa 151.4 10.3 South Africa 241.9 8.7 South Africa 1,015.0 3.0Peru 96.5 6.6 Peru 58.0 2.1 Canada 680.9 2.0Canada 23.8 1.6 Chile 37.7 1.4 Russia 569.6 1.7Kazakhstan 16.2 1.1 Canada 28.4 1.0 Iran 497.9 1.8Sweden 7.6 0.5 Kazakhstan 15.8 0.6 Peru 384.0 1.1New Zealand 5.2 0.3 Venezuela 6.2 0.2 Venezuela 370.6 1.1Venezuela 3.9 0.3 Saudi Arabia 5.8 0.2 Indonesia 285.2 0.8Others 7.4 0.5 Others 21.2 0.8 Others 1,560.9 4.6

Total-World 1,467.8 100 Total-World 2,769 100 T0tal-World 33,797 100

Source: Comtrade/UN

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 impact on transactions with ALADI partners, an initial observation refers to Chapter 72 – which is advanced in the chain in relation to Chapter 26, but with lower value added 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.


Parallel to this, as of 2004 China became exporter to Brazil in semi-finished and finished iron and steel within this chapter, reaching sales flows 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 value added products (semi-finished products and flat steel) and returned to providing raw material for Chinese steel production (ferro-alloy and pig iron).

Figure 11Brazil-Chinatradeflow(Chapter72-Iron&Steel)

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Source: Aliceweb, MDIC 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 NCM exports classified in Chapter 72, for which Brazil stands out in the Chinese market supply, shows that only in two of these NCM sales have continued to rise, still driven by the price factor; while China has started to rely on domestic supply or on imports coming from other countries for the remaining NCMs. 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.


Two conclusions can be outlined and are evidenced in the tables below. In the first place, while Brazil has achieved a promi-nent position in Chapter 72 products with less value added (accounting for almost 50% of Chinese imports for position 7201, surpassing Russia during the period from 2003 to 2007), in other positions Brazil is increasingly marginal, which can be ex-plained in part by the expansion of the Chinese steel industry (see the section above on China’s steel industry).

Figure 12Brazilian-Chinatradebalance(Chapter72-Iron&Steel)

Figure 13BrazilianexportstoChina.Mainproducts:(Chapter72-Iron&Steel)

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Table 8: Brazilian share of Chinese imports of key positions in Chapter 72Iron and steel products Position 2003

%2004%

2005%

2006%

2007%

Pig iron 720116 9.5 32.9 44.6 51.4 48.9Ferro-alloys 720217 16.1 4.9 11.9 10.1 7.5Semi-finished products 720718 18.8 13.3 19.0 0.0 1.1

Flat steel products720819 2.7 3.4 1.3 1.1 0.8720920 3.9 3.7 3.5 2.5 0.2

Source: Comtrade/UN

Further evidence comes from the types of products that China sells the most to Brazil: these are concentrated in Chapters 7208 and 7209 (Tables 9, 10, 11 and 12), which include laminated (rolled) iron and steel products. About half of all Brazilian imports from China are found this chapter.

Although it is still early to indicate a shift in Brazilian iron and steel laminate exports to the Latin American markets, an expan-sion of Chinese exports can be seen in the countries highlighted in the tables, as well as a drop or leveling in Brazilian exports, especially as of 2006. In a period of just four years, total Chinese exports to ALADI countries (excluding Brazil) under NCMs 7208 and 7209 went from almost zero to nearly the same amount as Brazilian exports to the region in both cases. This trend 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 the 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 production scale, along with a set of macroeconomic factors, give China a major competitive differential, particularly in the sectors with higher value added.

At the same time, Brazilian exports of these products to ALADI countries are more significant in 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 cladYear 2003 2004 2005 2006 2007

Country 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% 3.3%Source: Comtrade/UN

16 Pig iron, spiegeleisen in pigs, blocks or other forms.

17 Ferro-alloys.

18 Semi-finished products of iron or non-alloy steel.

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

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

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Table 10: Chinese exports to ALADI countriesPosition 7209 Flat-roll iron and non-alloy steel n/un600mm wd cold-rolled, not clad

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$Argentina 0 0 0 0 3,896Brazil 0 0 14,167 899,829 35,614,014Chile 0 0 0 1,601,917 2,264,754Colombia 0 0 0 379,405 222,646Cuba 162,136 1,101,004 1,035,395 265,376 582,956Ecuador 0 0 0 4,729,040 1,877,957Mexico 0 6,537,219 171,111 17,372,721 7,081,083Peru 0 0 15,747 2,625,943 27,842,734Venezuela 0 0 0 1,966,172 0Total ALADI 162,136 7,638,223 1,236,420 29,840,403 75,490,040World 90,142,617 334,081,791 385,073,710 906,955,573 1,115,468,097% ALADI 0.2% 2.3% 0.3% 3.3% 6.8%Source: Comtrade/UN

Table 11: Brazilian exports to ALADI countriesPosition 7208 Flat-roll iron and non-alloy steel n/un600mm wd hot-rolled, not clad

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$Argentina 28,268,404 59,766,245 56,952,166 65,885,319 104,884,773Bolivia 3,882,690 7,031,340 5,128,680 9,675,514 8,388,565Chile 44,259,604 89,828,895 58,089,832 92,647,018 97,347,108Colombia 16,618,416 59,762,708 96,107,572 149,674,592 72,424,642Cuba 2,022 0 0 0 42,697Ecuador 6,787,579 8,856,917 5,714,085 30,106,840 29,210,746Mexico 23,748,262 71,521,390 58,367,640 67,876,327 28,328,459Paraguay 2,185,579 4,135,850 3,124,333 8,199,220 9,323,382Peru 2,303,400 4,875,513 1,175,303 2,364,686 2,606,528Uruguay 1,830,356 3,931,653 4,277,282 3,734,152 3,434,961Venezuela 1,990,500 10,793,141 15,817,408 65,032,863 41,662,690Total ALADI 131,876,812 320,503,652 304,754,301 495,196,531 397,654,551World 433,808,787 766,377,752 785,610,996 1,054,351,262 748,780,632% ALADI 30.4% 41.8% 38.8% 46.9% 53.1% Source: Comtrade/UN

Table 12: Brazilian Exports to ALADI countriesPosition 7209 Flat-roll iron and non-alloy steel n/un600mm wd cold-rolled, no clad

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$Argentina 272,743 749,259 970,556 3,412,787 10,863,795Bolivia 1,427,320 3,286,951 5,383,355 6,268,008 3,492,591Chile 4,746,174 12,168,498 10,500,442 9,988,241 17,339,260Colombia 4,213,093 2,862,127 2,978,415 8,500,953 4,627,743Ecuador 69,057 46,646 1,141,176 3,412,627 3,923,804Mexico 1,409,625 9,740,154 7,994,265 14,713,905 2,839,629Paraguay 1,314,093 1,883,403 1,607,253 553,971 758,651Peru 735,056 2,340 25,447 1,164,577 712,714Uruguay 1,140,543 1,537,915 1,309,256 1,006,357 1,166,746Venezuela 0 0 550 0 22,380Total ALADI 15,327,704 32,277,293 31,910,715 49,021,426 45,747,313World 239,532,468 270,396,748 424,160,569 419,203,770 322,044,500% ALADI 6.4% 11.9% 7.5% 11.69% 14.2% Source: Comtrade/UN

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Source: Comtrade/UN

Source: Comtrade/UN

Source: Comtrade/UN

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

Source: Comtrade/UN

Figure 14Brazilian and Chinese exports to ALADI

(excl. Brazil) - Position 7208

Figure 15Brazilian and Chinese exports to ALADI

(excl. Brazil) - Position 7209

Figure 16World Chinese imports

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Figure 16 indicates the evolution of Chinese imports between 2003 and 2007, according to value-added level in the steel industry. The figure shows the decline in Chinese imports in products of higher value added in the steel production chain (position 7208) during this period, which reflects the expansion of domestic production of rolled iron and steel products. Furthermore, as previously mentioned, a supplier regionalization trend 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 steel supply chain, external-izing the links with lower value added and maintaining the most advanced segments of the chain through domestic production and by decreasing foreign supply, based on fewer countries with a high level of competitiveness and product quality.

Competition in the supply of iron ore and manufactured products from Latin American countries 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).21

In the case of Chapter 73, these trends towards “primarization” of Brazilian exports to China are even stronger. Here the exported volumes 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.


Source: Aliceweb, MDIC22

21 For further details see Annex I.

Figure 17Brazil-Chinatradeflow

Chapter73:Iron&steelarticles

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

Main imported products of selected positions 1998-2007

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Even though Brazil does not export higher value-added goods to China in the steel production chain, nothing prevents this in the case of 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 more clearly here. 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 men-tioning that China had already overtaken Brazil in the amount 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 world-wide 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).

Source: Comtrade/UN and Aliceweb/MDIC22

3.2 Chinese Access to Developed Markets: 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 steel consumers (as indicated in the iron and steel chain diagram). Thus the trade data presented in the tables below provides an indicative view of finished steel products for these markets.

22 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 (excl. 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. 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.

Figure 19Main exported positions fron Brazil an d China to ALADI countries

(excl. Brazil)

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Table 13: Main suppliers of iron and steel (Chapter 72) to the United States (US$ M) Market share (%)Countries 2003 2005 2007 2003 2005 2007Canada 2,526 3,973 4,620 23.0 16.8 17.1Brazil 1,119 2,742 2,779 10.2 11.6 10.3China 240 1,310 2,260 2.2 5.6 8.4Mexico 1,100 2,372 2,241 10.0 10.0 8.3Russia 272 1,199 1,148 2.5 5.1 4.2Germany 589 1,090 1,074 5.4 4.6 3.9South Korean 345 969 1,072 3.1 4.1 3.9Japan 494 830 1,066 4.5 3.5 3.9Sweden 279 615 844 2.6 2.6 3.1United Kingdom 424 817 815 3.9 3.5 3.0Others 3,581 7,705 9,160 32.7 32.6 33.8Total 10,969 23,621 27,079 100 100 100Source: Comtrade/UN

Source: Comtrade/UN

Figure 20Brazilian and Chinese steel products exported to the US (Chapter 72)

(Value in US$)

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Source: Comtrade/UN

Source: Comtrade/UN

Source: Comtrade/UN

Figure 21Brazilian and Chinese steel products exported to the US (Chapter 72)

(Volume in tons.)

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

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

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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 US imports dropped 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: Iron and steel articles (US$ M) Market share (%)

Countries 2003 2005 2007 2003 2005 2007China 3,615.2 6,925.9 10,803.8 22.2 26.8 32.0Canada 3,120.9 4,485.7 5,190.1 19.2 17.4 15.2Mexico 1,772.5 2,401.9 2,806.5 10.9 9.3 8.3Japan 1,339.6 1,928.2 2,040.3 8.2 7.5 6.1Germany 747.8 1,219.6 1,633.9 4.6 4.7 4.9South Korea 713.2 1,167.8 1,454.2 4.4 4.5 4.3India 368.6 741.6 1,309.9 2.3 2.9 3.9Italia 346.6 570.7 874.8 2.1 2.2 2.6United Kingdom 316.7 314.6 549.8 1.9 1.2 1.6Brazil 174.5 347.7 383.2 1.1 1.4 1.1Others 3,750.4 5,731.9 6,669.9 23.1 22.2 19.8Total 16,265.9 25,835.3 33,716.4 100 100 100Source: Comtrade/UN

China takes the top position in finished steel product exports to the US. Its market share increased by around 10% in the ob-served period, reaching 32.04% in 2007 (Table 14). Brazil’s exports to the US are marginal, accounting for approximately 1% of total US imports.

Source: Comtrade/UN

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

(Chapter 73)

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Among the main European market steel product suppliers, China 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 re-duced its share in total imports, indicating trade diversion.

Table 15: Brazilian and Chinese steel products imported by the European Union Chapter 72: Iron and steel (US$ M) Market share (%)

Countries 2003 2005 2007 2003 2005 2007China 305.8 1,382 9,731 2.3 5.1 17.5Russia 2,728.2 6,273 8,899 20.4 23.3 16.0Ukraine 1,128.5 2,952 4,618 8.4 10.9 8.3Turkey 918.3 1,466 3,426 6.9 5.4 6.2South Africa 1,029.8 1,998 2,576 7.7 7.4 4.6India 288.7 849 2,474 2.2 3.2 4.5Brazil 843.1 1,305.18 2,332 6.3 4.8 4.2South Korea 325.5 549.09175 2,316 2.4 2.0 4.2USA 732.1 1,035.36 2,209 5.5 3.8 3.9Norway 816.08 1,193.32 1,630 6.1 4.4 2.9Others 4,292.99 7,947.69 15,316 32. 29.5 27.6Total 13,409 26,950 55,527 100 100 100Source: Comtrade/UN

Figure 25Main steel products exported to the EU by China in 2007

(Chapter 73)

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Source: Comtrade/UN

Source: Comtrade/UN

In the case of European imports of steel products from Chapter 72, China concentrates its exports on high value added prod-ucts (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 high value added product exports have a significant market share in the European market compared to that of the United States.

Source: Comtrade/UN

Figure 26European Union imports of steel products

(Value - Chapter 72)

Figure 27European Union imports of steel products

(Volume - Chapter 72)

Figure 28Main steel products imported from China in 2007

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The Chinese market share in 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 the European Union Chapter 73: Articles of iron and steel (US$ M) Market share (%)Countries 2003 2005 2007 2003 2005 2007China 2,412.6 4,580.8 9,544.5 24.1 29.6 36.9Switzerland 1,547.0 1,909.2 2,543.6 15.5 12.4 9.8Turkey 769.0 1,303.4 2,420.5 7.7 8.4 9.4USA 1,289.5 1,574.9 2,382.3 12.9 10.2 9.2Japan 647.8 900.4 1,248.1 6.5 5.8 4.8India 325.0 607.3 1,045.7 3.3 3.9 4.1Norway 317.8 446.9 619.2 3.2 2.9 2.4South Korea 181.3 318.5 568.8 1.8 2.1 2.2Ukraine 168.4 468.9 559.0 1.7 3.0 2.2Brazil 62.8 109.0 160.1 0.6 0.7 0.6Others 2,271.1 3,235.9 4,796.4 22.7 20.9 18.5Total 9,992.4 15,455.2 25,888.1 100 100 100Source: Comtrade/UN

Figure 29Main steel products imported from Brazil in 2007

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3.3TariffProfileintheMining/SteelSector

Although applied tariff rates for imports are relatively low in developed countries, the steel industry is a sector historically marked by protectionism. In this sector, non-tariff barriers and other measures such as antidumping, safeguard and counter-vailing measures are more significant than tariffs.

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% 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 30Tariffs on EU imports of mining and steel products

(Average ad valorem duties %)

Figure 31Tariffs on US imports of mining and steel products


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In the case of Brazil and China, tariff escalation23 can be observed between the different production stages of the mining and steel chain. The average duties for semi-finished and finished products are relatively higher than average duties for raw materi-als. For example, in Chapter 73 (Articles of Iron and Steel), where high value added products are listed, there are tariff peaks that reach between 20-30% for both countries.

23 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.

Figure 32Tariffs on Brazilian imports of mining and steel products


Figure 33Tariffs on Chinese imports of mining and steel products


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4.TradePatterns,InvestmentProfilesandOutlookfortheMining/SteelProductionChaininBrazil

Given the above, one can conclude that the pattern of trade relations between Brazil and China has contributed to the gesta-tion of new production and marketing dynamics in this sector, which will tend towards consolidation in the medium term. Trade balance data in the three chapters that make up this production chain – 26, 72 and 73 – indicates a consolidation of trade surpluses in the initial links and a sharp reversal in Chapter 73 since 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 in the domestic market.

Source: Aliceweb/MDIC

Source: Aliceweb/MDIC

The main features of these new commercial and production dynamics in the iron ore/steel production chain, derived from the foregoing analysis, are described below:

Expansion and concentration of Brazilian exports in iron ore and growing “primarization” of semi-manufactured • product exports.

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.

Figure 34Brazil’s total trade balance, Chapter 26 and 72

Figure 35Brazil’s total trade balance, Chapter 73

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Limits on the export of higher value added steel products to major world markets.•

A trend towards the concentration of Brazilian higher value added steel product exports to Latin American markets, • where Brazil already faces strong competition from China, both inside and outside MERCOSUR.

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

If, on the one hand, the trends in Brazilian export “primarization” should not necessarily expel companies with higher value added production from the domestic market, they do however indicate an investment pattern that may 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 expected exports – much to the contrary. This will obviously depend on the dynamism of the global economy, but also the domestic economy, once the effects of the financial crisis have been at least partially over-come 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, foreseen investments 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 impact 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 sector strengthening based on less intensive links in technology, and Brazil’s taking advantage of 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 not large enough to occupy new markets.

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

Gerdau, a Brazilian steel company specializing in long steel, was a pioneer in the internationalization process that began in 1980. Currently, more than half of its 25 million ton installed capacity is located outside Brazil, especially in North America. Its internationalization strategy 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 be-gan to focus on countries in Latin America, Europe and, more recently, India, with a strategy of meeting the demand of the domestic markets in these countries and taking advantage of the increase in consumption resulting from economic growth in such regions (Valor Econômico, 2007b).

Vale’s internationalization process coincided with the expansion of Chinese demand for ores and the rise in prices due to the decline in commodity stocks at the beginning of this 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 corpora-tion. Before that, Vale had made acquisitions in Europe and forged partnerships in China.

One differentiating element between Vale’s and Gerdau’s strategies is the significance of strategic alliances that Vale has undertaken with foreign companies. 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).

Vale has therefore 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.

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This investment in processing abroad while Brazil accounted for the export of basic raw material does not coincide with the in-terests 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, as steel plates will be produced in crude state (i.e. without further processing, such as galvanization) and also for Latin American countries.

This confirms the hypothesis that the internationalization strategies 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 reinforce a profile of productive specializa-tion based in the segments with less value added.

This hypothesis is reinforced by the internationalization strategies of Chinese companies, which are making foreign invest-ments 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.

Table 17: Internationalization Strategies of Chinese Companies in BrazilCompany Established Location Activities

China MetaisMinerals Ltda(China Minmetals)

1999 Rio de Janeiro/RJ

The company will develop and fit out a 450 m3 oven for the Brazilian Cosipar in a project valued at 27.4M Euros (US$ 42.2M). The Chinese company has 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 aluminum production.

Sinosteel Br.Metalúrgica Ltda.

– Rio de Janeiro/RJ

The second largest iron ore importer in China, this company provides materials and services to Chinese companies and intends to establish partnerships with Brazilian companies to exploit iron ore in Brazil. The main targets are small com-panies in northeastern and northern states such as Bahia and Amapá.

Source: Own production based on Valor Econômico

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Bibliography

Alexandre de Freitas /Camargo, R. (2006): Dialogue on Globalization Briefing Papers’ Economic Relations between Brazil and China: A Difficult Relationship, Bonn: Friedrich Ebert Stiftung.

Fonseca, P. et al. (2007): Siderurgia: Dimensionamento do Potencial de Investimento, in: 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: DGB 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. /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; online; www.vale.com (in Portuguese). (Accessed: 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.

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Annex I: Iron and Steel SectorTable A1: Main share of Chinese suppliers of selected positions 2003 Chapter 72: Suppliers

Code 7201Country Value US$ Kg % shareRussia 51,935,482 318,957,696 67.6North Korea 14,857,750 118,874,028 19.3Brazil 7,311,862 60,038,000 9.5Other countries 2,737,922 15,097,600 3.6World Total 76,843,016 512,967,324 100

Code 7202Country Value US$ Kg % shareKazakhstan 47,706,343 93,108,121 31.3Colombia24 30,650,396 9,736,465 20.1Brazil 24,554,845 2,904,713 16.1South Africa 21,798,394 42,932,225 14.3Other countries 27,836,642 19,952,948 18.3World Total 152,546,620 168,634,472 100

Code 7207Country Value US$ Kg % shareRussia 384,351,417 1,528,743,360 26.5Brazil 272,743,052 1,077,978,336 18.8Ukraine 247,050,190 1,011,131,608 17.0Turkey 143,331,265 551,677,512 9.9Mexico25 82,266,208 313,716,416 5.7Other countries 320,570,923 1,348,145,933 22.1World Total 1,450,313,055 5,831,393,165 100

Code 7208Country Value US$ Kg % shareJapan 554,521,269 1,478,922,792 15.5Ukraine 515,105,170 1,796,124,440 14.4South Korea 461,398,670 1,182,970,181 12.9Russia 415,974,921 1,333,278,957 11.6Other Countries - Asia 252,218,498 692,272,668 7.0India 244,664,003 758,932,533 6.8Romania 156,625,725 526,189,358 4.4United States 148,157,001 399,124,771 4.1Kazakhstan 117,807,515 445,994,196 3.3Brazil 94,809,032 306,064,607 2.7Indonesia 85,056,666 257,771,601 2.4Other countries 536,889,333 1,636,604,552 14.9World Total 3,583,227,803 10,814,250,656 100

Code 7209Country Value US$ Kg % shareOther Countries - Asia 774,546,563 1,776,759,451 18.5Japan 558,772,295 1,194,059,074 13.3Russia 557,635,776 1,370,646,632 13.3South Korea 526,099,095 1,085,910,256 12.5Kazakhstan 250,799,192 645,960,866 5.9Ukraine 241,960,027 638,301,212 5.8India 191,141,281 421,536,771 4.6Brazil 165,599,752 386,895,290 3.9United States 118,932,746 254,419,352 2.8Thailand 112,662,245 256,071,169 2.7South Africa 90,379,638 212,797,979 2.2Romania 76,345,521 197,091,300 1.8Mexico 26 74,813,361 162,431,947 1.8Argentina 59,947,953 142,616,861 1.4Other countries 396,106,592 900,974,573 9.4World Total 4,195,742,037 9,646,472,733 100

Source: Comtrade/UN

24 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.25 Mexico competes with Brazil in subposition 720712.26 Mexico and Argentina compete with Brazil, especially in sub-position 720917.

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Table A2:Chinese suppliers of Chapter 72 products 2005

Code 7201Country Value US$ Kg % share

Brazil 29,861,491 112,169,000 44.6North Korea 19,999,709 98,565,822 29.9Russia 14,530,642 53,163,256 21.7Other countries 2,507,120 6,178,274 3.8World Total 66,898,962 270,076,352 100


Colombia 160,404,081 27,839,846 25.3Kazakhstan 112,636,273 132,323,999 17.7New Caledonia 78,347,898 18,496,390 12.3Brazil 75,262,649 8,826,000 11.9Other countries 208,622,431 182,458,845 32.8World Total 635,273,332 369,945,080 100


Ukraine 118,142,878 294,729,088 24.2Brazil 92,749,634 246,243,646 19.0Japan 46,609,075 147,048,476 9.6Mexico 27 45,426,686 76,424,584 9.3United Kingdom 33,710,503 70,664,157 6.9Venezuela28 17,141,369 46,164,056 3.5Other countries 133,917,286 353,678,471 27.5World Total 487,697,431 1,234,952,478 100


Japan 797,566,839 1,143,435,918 29.2Russia 380,179,043 679,436,291 13.9South Korea 331,529,799 467,577,339 12.1Other Countries - Asia 251,464,395 474,040,152 9.2Thailand 171,349,158 311,392,614 6.3Kazakhstan 108,426,286 236,376,642 3.9Germany 104,165,036 104,177,381 3.8India 88,701,402 163,796,097 3.3Ukraine 69,731,892 134,902,387 2.6Brazil 34,464,368 74,747,260 1.3Other countries 392,239,852 665,034,562 14.4World Total 2,729,818,070 4,454,916,643 100

Code 7209Country Value US$ Kg % shareOther Countries - Asia 880,300,095 1,408,335,783 18.8Russia 828,982,522 1,285,881,880 17.7South Korea 784,631,646 1,115,677,617 16.8Japan 761,642,844 1,051,962,962 16.3Kazakhstan 282,019,215 477,631,372 6.0Brazil 163,934,214 287,852,891 3.5Ukraine 138,330,304 221,512,521 2.9India 130,711,322 182,987,355 2.8South Africa 98,608,794 148,812,066 2.1Turkey 88,167,061 135,104,377 1.9Thailand 72,479,546 128,399,526 1.5Mexico 35,014,118 47,374,487 0.8Other countries 408,648,836 663,433,209 8.7World Total 4,673,470,517 7,154,966,046 100

Source: Comtrade/UN

27 Mexico competes with Brazil in sub-position 720712 (Half-Finished Products).28 Venezuela competes with Brazil in sub-position 720712 (Half-Finished Products).

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Table A3: Chinese suppliers of Chapter 72 products 2007


Brazil 117,535,601 332,502,752 48.9Russia 44,849,107 120,628,352 18.7Ukraine 30,219,000 71,950,000 12.6Other countries 47,528,925 170,630,196 19.8World Total 240,132,633 695,711,300 100


Kazakhstan 653,261,455 659,642,086 26.2Colombia 580,160,438 38,752,808 23.2South Africa 460,298,615 547,784,832 18.4Brazil 188,008,746 13,900,000 7.5Other countries 614,661,052 283,584,182 24.6World Total 2,496,390,306 1,543,663,908 100


Japan 34,222,900 94,235,481 51.1South Korea 10,986,100 23,994,583 16.4Germany 8,095,110 7,266,367 12.1North Korea 7,740,154 24,545,696 11.6Mongolia 1,532,644 5,816,916 2.3Italy 1,297,815 418,323 1.9Other countries 3,080,642 3,799,586 4.6World Total 66,955,365 160,076,952 100


Japan 903,577,756 1,402,473,383 60.4South Korea 225,144,389 319,308,928 15.0Other Countries - Asia 173,092,652 315,438,746 11.6Germany 66,955,429 39,631,704 4.5Hong Kong 20,944,749 21,873,562 1.4Kazakhstan 16,035,596 40,569,910 1.1United States 15,819,549 7,406,155 1.1France 15,609,239 6,827,516 1.0Brazil 11,682,288 21,891,852 0.8Austria 5,690,814 3,774,854 0.4Other countries 42,037,518 57,609,677 2.8World Total 1,496,589,979 2,236,806,287 100


Japan 805,244,834 1,151,384,587 31.9South Korea 748,700,361 1,103,162,671 29.8Other Countries - Asia 626,786,460 960,980,097 24.9Kazakhstan 97,078,555 199,162,052 3.9Thailand 55,897,334 93,702,153 2.2Russia 21,713,598 41,807,678 0.9Turkey 15,197,585 19,325,718 0.6Germany 13,094,381 17,037,741 0.5Netherlands 8,978,796 17,213,834 0.4Brazil 5,768,214 8,924,962 0.2Other countries 118,568,807 200,461,263 4.7World Total 2,517,028,925 3,813,162,756 100


Japan 1,808,627,960 2,231,000,936 50.4South Korea 896,771,182 1,148,904,824 24.9Other Countries - Asia 637,411,788 798,658,539 17.8Germany 31,437,074 33,981,827 0.9Kazakhstan 29,239,887 40,852,560 0.8Netherlands 14,125,158 19,309,899 0.4Norway 13,470,720 16,013,220 0.4Brazil 10,377,185 12,725,177 0.3Other countries 146,737,528 193,962,148 4.0World Total 3,588,198,482 4,495,409,130 100

Source: Comtrade/UN

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ChineseexportstothirdmarketsofthemostsignificantproductsexportedfromChinatoBrazil

Table A4: Chinese exports to ALADI countriesPosition 7304 Ferrous waste and scrap, remelted scrap iron/steel ingot

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$Argentina 193,141 851,267 3,001,073 4,771,011 9,150,696Brazil 2,920,925 4,461,580 8,720,358 16,727,039 50,389,918Chile 490,393 614,352 872,403 11,405,058 8,611,476Colombia 49,602 33,052 1,352,100 10,554,254 28,517,941Cuba 85,345 1,954,551 295,573 399,168 834,822Ecuador 0 3,351,323 9,726,213 12,423,369 29,791,458Mexico 54,494 497,538 1,431,311 5,472,890 7,753,421Paraguay 0 0 0 3,523 121,414Peru 395,321 129,581 885,233 19,598,749 25,291,275Uruguay 0 101,038 12,191 153,563 29,360Venezuela 0 1,878,224 6,556,724 1,619,882 821,599Total ALADI 4,189,221 13,872,506 32,853,179 83,128,506 161,313,380World 350,466,696 631,269,605 1,487,027,203 2,860,386,152 4,789,490,797% ALADI 1.2% 2.2% 2.2% 2.9% 3.4%Exp. China-ALADI Base 100 = 2003 100 331.1 784.2 1,984.3 3,850.7

Source: Comtrade/UN

Table A5: Brazilian Exports to ALADI countriesPosition 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 2,495,033 406,725 474,073Bolivia 1,316,988 197,428 32,924 3,687,652 725,737Chile 1,780,774 2,221,868 3,582,789 5,008,792 8,430,401Colombia 4,998,245 7,078,085 14,668,073 13,142,472 14,305,077Cuba 289 1,231,811 910,847 3,684 100,560Ecuador 608,076 147,589 59,732 21,936,561 2,962,226Mexico 533,664 1,090,027 632,265 1,004,976 350,824Paraguay 193,067 100,775 231,998 640,962 487,698Peru 3,567,136 3,726,021 986,225 7,759,934 4,544,259Uruguay 250,641 188,748 146,038 1,055,483 400,392Venezuela 3,929,503 1,924,007 19,456,988 7,419,248 15,245,267Total ALADI 17,531,534 20,672,449 43,202,912 62,066,489 48,026,514World 83,759,085 117,434,271 $194,692,818 336,684,605 220,434,026% ALADI 20.9% 17.6% 22.2% 18.4% 21.8%Exp Brazil-ALADI Base 100 =2003 100 117.9 246.4 354.0 273.9

Source: Comtrade/UN

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Table A6: Chinese exports to ALADI countriesPosition 7308 Structures nesoi and parts thereof, of iron or steel

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$Argentina 32,722 111,731 496,038 1,884,203 4,393,297Bolivia 50,994 11,463 1,505 27,483 618,654Brazil 1,276,490 4,626,733 6,021,650 72,781,079 34,450,199Chile 482,679 1,985,028 2,810,973 6,048,853 8,924,344Colombia 200,962 340,600 762,977 1,999,978 6,989,916Cuba 634,080 541,228 870,340 1,247,762 1,742,792Ecuador 450,123 656,755 3,888,545 1,132,614 11,199,871Mexico 810,175 1,368,403 5,687,192 8,444,009 17,260,224Paraguay 0 0 0 26,441 125,332Peru 178,783 266,056 563,569 1,415,827 4,717,112Uruguay 21,150 97,375 151,730 668,972 39,277Venezuela 101,941 348,290 1,055,164 1,799,461 20,325,243Total ALADI 4,240,099 10,353,662 22,309,683 97,476,682 110,786,261World 1,075,103,944 1,582,345,685 2,565,514,364 3,982,633,630 6,200,418,420% ALADI 0.4% 0.8% 0.8% 2.5% 1.8%Base 100 = 2003 100 244.2 526.2 2,298.9 2,612.8

Source: Comtrade/UN

Table A7: Brazilian exports to ALADI countriesPosition 7308 Structures nesoi and parts thereof, of iron or steel

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

Argentina 1,731,433 7,006,501 9,162,535 12,672,042 20,658,003Bolivia 334,266 7,728,046 4,132,766 3,523,949 2,006,595Chile 9,458,920 8,528,381 23,318,550 7,530,727 8,953,134Colombia 131,321 200,048 266,782 1,062,243 69,760Cuba 2,400 266,990 739,323 325,157 580,421Ecuador 286,617 628,258 10,850,533 694,700 69,423Mexico 2,924,902 14,730,233 2,245,414 250,359 145,925Paraguay 1,941,520 962,305 2,767,570 1,359,944 1,239,657Peru 1,357,462 459,166 790,425 220,258 3,939,374Uruguay 728,409 4,857,036 4,919,477 11,548,459 6,090,162Venezuela 17,983,444 38,379,292 7,721,269 5,303,604 12,316,919Total ALADI 36,880,694 83,746,256 66,914,644 44,491,442 56,069,373World 50,368,698 107,733,699 117,742,649 80,138,126 83,438,440% ALADI 73.2% 77.3% 56.8% 55.5% 67.2%Base 100 = 2003 100 227.0 181.4 120.6 152.0

Source: Comtrade/UN

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Table A8: Chinese exports to ALADI countriesPosition 7315 Chain and parts, of iron or steel

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$Argentina 2,443,615 3,816,277 4,252,754 4,134,782 6,655,714Bolivia 0 38,241 18,193 20,082 31,577Brazil 11,800,730 17,066,248 19,126,279 22,739,028 41,864,761Chile 2,601,685 4,094,788 4,584,403 7,391,645 8,415,135Colombia 826,728 1,903,044 2,449,919 2,169,806 3,397,863Cuba 54,807 99,981 209,818 210,125 111,273Ecuador 656,778 926,436 744,098 882,047 870,468Mexico 3,144,975 3,965,279 4,047,107 4,945,237 5,597,556Paraguay 218,906 417,838 617,565 563,232 561,199Peru 1,494,692 1,801,639 2,593,243 3,217,174 4,001,456Uruguay 259,049 437,682 506,830 524,919 551,230Venezuela 257,420 727,789 1,827,253 1,452,747 2,230,917Total 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 8.4% 8.8% 7.8% 7.5% 9.5%Base 100 = 2003 100 148.5 172.5 203.1 312.7

Source: Comtrade/UN

Table A9: Brazilian exports to ALADI countriesPosition 7315 Chain and parts, of iron or steel

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$Argentina 489,105 824,580 1,126,724 1,295,014 1,807,765Bolivia 201,372 276,511 283,421 656,446 670,480Chile 235,134 267,868 707,414 342,474 1,080,768Colombia 185,031 174,570 270,595 424,702 367,603Cuba 129,495 470,583 159,753 1,371,381 180,631Ecuador 42,073 125,751 170,030 459,205 139,933Mexico 158,802 419,733 327,372 737,339 237,044Paraguay 373,050 569,348 567,586 969,849 1,320,040Peru 58,967 65,643 73,488 180,771 148,753Uruguay 74,015 118,016 201,512 93,292 103,045Venezuela 179,426 215,023 279,756 382,933 489,417Total ALADI 2,126,470 3,527,626 4,167,651 6,913,406 6,545,479World 7,167,176 17,736,230 16,554,780 21,512,153 54,112,971% ALADI 29.7% 19.9% 25.2% 32.1% 12.1%Base 100 = 2003 100 165.9 195.9 325.1 307.8

Source: Comtrade/UN

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Table A10: Chinese exports to ALADI countriesPosition 7318 Screws, bolts, nuts, washers etc, iron or steel

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$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 2,391,159Brazil 2,255,917 4,626,740 17,646,922 26,163,830 37,289,672Chile 2,612,909 5,541,178 9,366,968 12,034,642 15,401,552Colombia 1,223,526 2,149,656 5,497,250 8,997,045 13,825,744Cuba 35,758 516,061 322,711 1,009,099 746,140Ecuador 1,122,142 1,666,775 1,809,352 3,668,079 3,631,464Mexico 2,724,596 7,115,016 12,106,444 21,411,740 33,053,865Paraguay 125,835 99,338 168,646 353,482 405,449Peru 1,329,393 2,733,626 3,861,726 5,850,105 9,733,701Uruguay 41,688 101,613 133,450 329,695 346,549Venezuela 219,727 809,210 3,565,766 5,848,201 8,749,729Total 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 1.7% 2.2% 3.4% 3.9% 4.2%Base 100 =2003 100 210.4 446.6 694.9 1,018.1

Source: Comtrade/UN

Table A11: Brazilian Exports to ALADI countriesPosition 7318 Screws, bolts, nuts, washers etc, iron or steel

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$Argentina 11,348,158 19,886,965 22,625,999 25,863,550 29,520,141Bolivia 678,972 1,072,740 1,845,663 1,744,429 2,874,998Chile 1,701,836 2,073,530 4,157,135 3,011,011 3,326,915Colombia 594,591 1,273,856 2,324,673 1,804,946 1,839,882Cuba 75,962 172,253 702,370 120,011 400,495Ecuador 577,374 706,800 1,322,907 1,260,488 1,279,875Mexico 2,819,006 3,380,974 3,603,861 4,088,863 4,290,042Paraguay 1,530,784 2,202,189 2,629,767 3,097,938 4,019,341Peru 338,757 414,660 651,942 844,689 1,202,918Uruguay 1,100,457 2,325,439 2,822,048 2,850,766 3,275,295Venezuela 1,762,565 3,480,297 2,707,462 4,060,347 4,573,762Total ALADI 22,528,462 36,989,703 45,393,827 48,747,038 56,603,664World 49,241,672 73,265,097 87,564,309 98,888,582 115,539,649% ALADI 45.8% 50.5% 51.8% 49.3% 48.9%Base 100 =2003 100 164.2 201.5 216.4 251.3

Source: Comtrade/UN

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Table A12: Chinese exports to ALADI countriesPosition 7323 Household articles and parts, iron and st, ir or steel wool etc

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$Argentina 2,701,439 2,842,400 3,871,895 6,426,479 5,735,971Bolivia 1,775 24,447 9,612 50,750 46,569Brazil 1,994,777 7,005,349 13,696,142 19,472,464 30,424,916Chile 9,983,816 9,431,506 11,555,360 14,754,947 15,949,143Colombia 930,256 1,194,609 3,419,164 4,070,032 4,839,957Cuba 826,265 514,553 1,024,895 1,226,792 1,661,412Ecuador 3,418,211 2,691,649 3,291,327 3,215,501 3,145,743Mexico 14,660,847 18,975,979 14,862,642 19,857,738 19,174,642Paraguay 74,518 240,717 148,423 260,083 251,280Peru 1,250,730 1,211,951 1,332,955 1,878,820 2,579,040Uruguay 1,043,579 1,064,070 954,192 2,124,530 2,086,961Venezuela 955,844 1,438,979 2,953,690 5,749,915 4,237,048Total 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 2.2% 2.5% 2.8% 3.3% 3.4%Base100=2003 100 123.2 150.9 209.0 238.2

Source: Comtrade/UN

Table A13: Brazilian exports to ALADI countriesPosition 7323 Household articles and parts, iron and st, ir or steel wool etc

Year 2003 2004 2005 2006 2007Country US$ US$ US$ US$ US$Argentina 288,697 559,596 468,363 776,091 1,082,986Bolivia 581,748 622,829 769,980 1,096,077 1,240,407Chile 363,247 372,430 453,113 462,151 347,077Colombia 151,235 190,314 413,060 273,855 198,913Cuba 38,794 4,858 37,559 133,268 7,209Ecuador 565,450 779,473 353,901 815,383 1,143,667Mexico 644,194 572,022 438,840 627,988 489,087Paraguay 1,261,741 1,592,041 1,732,803 1,796,745 1,918,212Peru 126,467 54,520 78,410 129,927 158,030Uruguay 93,822 170,136 259,575 187,547 325,416Venezuela 8,689 77,148 267,102 388,243 1,318,044Total ALADI 4,124,084 4,995,367 5,272,706 6,687,275 8,229,048World 18,292,005 18,949,893 14,215,730 16,587,170 18,235,203% ALADI 22.6% 26.4% 37.1% 40.3% 45.1%Base 100 = 2003 100 121.1 127.9 162.2 199.5

Source: Comtrade/UN

“Cuadernos de Trabajo del Cechimex”

Número 1, 2010. Mexico’s Economic Relationship with China: A Case Study of the PC Industry in Jalisco, Mexico.

Número 2, 2010. A Study of the Impact of China’s Global Expansion on Argentina: Soybean Value Chain Analysis.

Número 3, 2010. Economic Relations between Brazil and China in the Mining/Steel Sectors.

Documents

Cuadernos de trabajo del CECHIMEX. Economic Relations ......An Overview of the Brazilian and Chinese Steel and Iron Industries 2.1 World Mining/Steel Production and Trade ... Australia