While Mexican steel consumption
is quite strong, domestic producers arent feeling as much
of a benefit as would be expected due to a combination of
rising imports and foreign investment.
With a number of Mexican
steelmakers purchased by foreign companies over the past 20
years, there really isnt as much of a Mexican steel
industry as there used to be, said Al Zapanta, president
and chief executive officer of the U.S.-Mexico Chamber of
Mexico used to be a leader in
both the production of steel and the manufacture of specialty
parts, but that has changed, Zapanta said, noting that
Mexican-owned companies have produced virtually no steel pipe
since the countrys largest pipe mill, Tubos de Acero de
Mexico SA, was acquired by Tenaris SA nearly 10 years ago.
Also, there arent as many domestically owned plate
producers as there used to be.
This, combined with growing
steel imports, led Mexican crude steel production to fall 2.8
percent to an estimated 17.6 million tonnes last year from 18.1
million tonnes in 2011, according to Christopher Plummer,
managing director of Metal Strategies Inc., West Chester, Pa.,
despite apparent steel consumption that was forecast to reach a
record 21.5 million tonnes in 2012. Mexican mills
shipments of finished steel were expected to fall 2.5 percent
last year, with Mexican imports rising a whopping 44.1 percent
and Mexican exports falling 23.6 percent, he said.
The volume of imports could
appear to be deceptively high, with some steel
products--including material from the United States and Canada,
the countrys largest trade partners--not produced in
Mexico, Zapanta said.
However, another North American
steel market observer said that with the steel market in China
and elsewhere in Asia softening, and with Mexican trade law
enforcement less stringent than in the United States, a good
percentage of the steel imports have been unfairly traded.
There is hope that the business
environment will pick up, at least modestly, for Mexican
steelmakers. The domestic steel market is growing by bits
and pieces, Zapanta said.
Integrated steelmaker Altos
Hornos de Mexico SA de CV, for example, is set to increase its
crude steel capacity by about 40 percent starting in the first
quarter of 2013, largely through the completion of its Fenix
project, which includes a 1.4-million-tonne-per-year blast
furnace, a 1.2-million-tonne electric-arc furnace, a
1.2-million-tonne slab caster and a 1-million-tonne plate
This and other expansion
projects, some of which are at foreign-owned steelmaking
facilities, could keep some imports out and increase
steelmakers ability to export, Plummer said. He predicted
that Mexican crude steel production would rise about 8 percent
in 2013, with mill shipments increasing 7.5 percent and imports
falling 2 percent, although Mexican exports are forecast to
decline another 7.1 percent.