China's return to production after it eased its Covid-19 lockdowns increases the probability that it will export excess capacity to Latin America, weighing on already weak regional markets, industry association Alacero has said.

The association is already pessimistic over the outlooks in major economies Mexico, Brazil and Argentina. Mexican first-quarter GDP contracted by 2.4pc on the year as a result of a poor performance in the automotive, manufacturing and industrial segments. Brazil's industrial output fell by 9.1pc and Argentina's industrial production dropped by 0.9pc from February to March as a result of measures to combat the coronavirus.

Companies throughout Latin America reduced production and stopped operations as governments sought to stem the spread of the Covid-19 contagion. Crude steel production for the first quarter dropped by 8pc on the year, while there was a 3pc decline in production of finished steel products. Argentina's steel production in March was 27pc lower on the year as automotive and cement production activity halted.

This had a direct impact on apparent consumption, with figures for February already showing a 2.5pc drop compared with the same month last year. Exports also fell by 15pc from December 2019 to February 2020, reflecting weakness globally in steel demand.