Already in July 2016 the Peruvian steelmaker Acero Arequipa temporarily closed its production plant in Arequipa suspending 120 workers due to not being able to compete with cheap Chinese imports. The plan was to reopen the plant as soon the market climate and economic conditions improve. Now however the company decided to suspend production in Arequipa permanently as the competition from Chinese steel imports at dumping prices remains unfair despite appeals with the National Institute for the Defense of Competition and Intellectual Property (INDECOPI).
A representative of Acero Arequipa said that the production at the Arequipa plant isn’t sustainable when having to fight a heavy subsidized Chinese metal-working guild. He continued to explain that in the last months nothing changed in respect to the unfair competition caused by Chinese steel imports at dumping prices, which left the Arequipa production plant unable to compete in the current economic climate.
China has subsidized the growth of its steel industry for years with grants, cheap loans, free land and low energy costs causing huge overcapacities at times of a shrinking global demand. This depending on how you look at it, enables or forces Chinese metal-working companies to export their products at whatever prices. The Peruvian government doesn’t seem to be in a position to put pressure on its main trading partner China and rather intensifies the excellent diplomatic and economic relations.
So Acero Arequipa decided to focus its efforts on improving their production processes at the company’s plant in Pisco, Ica, where they can obtain better production prices, and only continue to operate its distribution center in Arequipa.