The structure of the Chilean steel industry and the market response did not allow tariffs to be passed on to price, making the company's financial continuity unsustainable.

The board of directors of the Huachipato Steel Company   (CSH) was forced to make the difficult decision to indefinitely suspend the Chilean company's steel operations.

The above is a product of multiple factors that, they estimate, cannot be reversed in the short or medium term, among which stand out the impossibility of transferring to prices the surcharges recommended by the Anti-Distortion Commission of the Chilean Senate, the intensification of Chinese dumping and the complex financial situation that the firm has faced for years.

Although the Anti-Distortion Commission recognized the existence of dumping in the import of steel bars of Chinese origin, and imposed temporary surcharges on these products while it makes a final decision, almost four months after the measure was implemented, the behavior of the market has made it impossible to correct imbalances and transfer these tariffs to the price.

Likewise, the company's board of directors concluded that the application of surcharges will not be enough to generate structural changes in the market that will ensure the financial viability of the steel business in its current form.

The factors described above deepened the complex financial situation of the company, which between 2019 - when high levels of exports from the Asian country began - and the first quarter of 2024, has lost more than US$ 700 million. In 2023 alone, the company recorded losses of US$ 385.5 million and in the first quarter of 2024 it already recorded a loss of US$ 41.8 million, a trend that has continued in the following months.  

The president of the board of directors of Huachipato, Julio Bertrand, added that “ this is a painful day for all of us who make up the company. For more than 70 years we have been the main producer of steel for mining and demonstrated the commitment that we have had since our origins with the productive development of the Biobío Region and the country. However, in this scenario, the financial continuity and sustainability of our steel operation becomes unviable .”

The executive also thanked “ the concern and support we have received from national, local and communal authorities; the infinite commitment of our workers, contractors and suppliers, as well as the support of the entire community that, for decades, has demonstrated its efforts to keep an emblematic company in the industrial development of our country operational.

This decision hurts us deeply, but we are convinced that we did absolutely everything within our power from an operational, legal, financial and human point of view to maintain the company's steel activities."

CSH will gradually suspend its steel operations, a process that is estimated to culminate during the month of September. During this time, you will fully comply with all your previously agreed commitments.

"Huachipato is committed from now on to all its clients to comply with their contracts and the deliveries of the last tons of steel, to its suppliers to properly terminate their contracts and fundamentally, to all its workers to implement a plan of robust exit, with training and job reintegration programs," declared Bertrand in a message recorded and broadcast by the steel company.

For his part, the general manager of CAP - controller of Huachipato -, Nicolás Burr, reaffirmed the Group's commitment to Biobío, and explained that the company will maintain its non-steel operations, such as the development of port and logistics activities, extraction and commercialization of limestone and the development of new projects in the area.

“We will continue investing in the Region and working on innovative initiatives, such as the implementation of a green steel pilot project, the extraction of Rare Earths and the development and production of alloys for permanent magnets, critical materials for decarbonization, a central element of our Strategy. 2030.”