Peru's top steelmaker fights back with greener production amid fierce competition

Peru's largest steelmaker, Corporación Aceros Arequipa, is pushing for a shift to greener production as it battles rising competition from Brazil and China. The company, which meets around 60% of Peru's domestic steel demand, has seen profits shrink due to falling global prices and cheaper imports flooding the market.

Over the past two years, Chinese steel exports have surged, undercutting local producers and forcing Aceros Arequipa to cut prices, slow production, and rethink its strategy.

Between March 2024 and March 2026, global steel prices dropped sharply by 25–30%. In China, prices fell from roughly $550 per ton to $380 per ton, driven by weak domestic demand and excess supply. Peru's market was less severely hit, with prices declining from $620 per ton to $520 per ton due to higher import costs and limited local production.

This price gap made Chinese steel far more competitive, squeezing Aceros Arequipa's regional market share in Latin America by 8–10%. The company responded by lowering prices, accepting thinner margins, and reducing output by 15% in 2025 to stay afloat. Now, it plans to invest in modern furnaces to improve efficiency and cut costs.

Beyond price pressures, Aceros Arequipa faces political instability in Peru and high energy costs, which threaten its operations. Yet, the company remains a key player in the country's construction sector, which is seeing modest growth thanks to government infrastructure projects. Its stable performance—unlinked to volatile tech stocks—and dividend yields in Peruvian soles also make it an appealing option for foreign investors, particularly those in the DACH region looking to diversify.

Aceros Arequipa's push for greener steelmaking comes at a critical time. The company must navigate falling prices, cheaper imports, and domestic challenges while maintaining its dominant position in Peru's market. Success in modernising its operations could help secure its future in an increasingly competitive industry.