Steel location Venezuela - Situation and outlook

Venezuela's economic course has been characterised by increasing government control. This holds back investors and hinders economic development. The economy heavily relies on the oil sector. Although the country boasts tremendous mineral resources, this potential has been developed only to a very small extent. Another argument for investments is the country's geographic position between the Nafta and Mercosur regions. In 1997 the steel industry was released from government control. Since then it has been managed by a consortium under the leadership of Techint, Argentina. Due to the economic slump, steel trade has generally been weak. However, exports (primarily semis and flats) showed some recovery in 1998. This demand situation is likely to continue throughout the year 1999. All crude steel is produced via the electric steelmaking route. Since 1991 average capacity utilisation has been above 80 %. Capacity utilisation is rather low in the fields of steel processing and tube and pipe production. For more than a decade DRI has been used as a high-grade scrap substitute. Alongside Mexico and India, Venezuela is one of the world's largest DRI producers. Foreign investors are heavily engaged in the erection of new DRI production capacities. The output from these additional capacities is predominantly destined for exports.