Steel Opportunities

An Expert's View about Sales in Mexico

Last updated: 22 Feb 2011

Mexico is the second largest steel producer in Latin America and the 15th in the world. Its consumption is almost the same as Brazil. The country is also a huge steel importer with most imports made by 41 service centres.

Sector briefing Steel Opportunities in Mexico Why Mexico? Mexico is the second largest steel producer in th Latin America and the 15 in the world. Its consumption is almost the same as Brazil. The country is also a huge steel importer with most imports made by 41 service centres. The steel industry is a big consumer of power (7% of national production), natural gas (21.9%) and is also an important client for railroad services. Mexican steel exports are 5.2 million metric tons; imports are 6.1 million metric tons. In relation to the steel market, NAFTA has benefited by directing it towards more stable electrical equipment, to establish extensive and prices and healthy profit margins contrary to sophisticated manufacturing facilities in Mexico. the oversupply and depressed prices that These facilities are significantly different from characterised the market in the decade prior to the mere maquiladoras, or assembly plants, 2002. which have historically used parts sourced from other countries. The industry?s input cost Steel products are exported to 97 countries advantage, which includes labour, electricity and imported from 90 countries. The industry and gas, enables it to profitably and has undertaken measures to increase its competitively export steel products. competitiveness, leading to an increase in the productivity to 542kg of steel per employee. Find general information on Mexico?s market conditions on UKTI?s website. The Doing Mexico has considerable appeal as a steel Business Guide for Mexico gives an overview of producer. Factors like receptiveness to foreign Mexico?s economy, business culture, potential investment are encouraging major players in opportunities and an introduction to other steel end-use sectors such as automotive and relevant issues. UK Trade & Investment Sector briefing: Steel opportunities in Mexico ? Construction. Rodrigo Vázquez, Steel Opportunities Marketing director of Harbor Intelligence said that building In the next five years, the ironworks sector in investment in March was reported to be Mexico will invest about $10,000 million US 23% higher than the same month last dollars to diversify their products and replace year. The analyst mentioned that there imports. Mexico?s capacity of production of are opportunities in importation steel will grow by over 30 million tons by 2013, replacement because of the deficit of 36% more than the actual capacity of 22 some products such as: million tons. 2010 is a promising year for the o Tinplate iron and steel sector according to experts. The o Special steel bars increase in prices, the growth in demand and o Plate and structural steel industrial activity in Mexico are signs of this. Some of the main players in the steel sector The president of Cámara Nacional de la are listed as follows. These companies Industria de Hierro y del Acero (CANACERO), represent business opportunities for UK states that there are great expectations about companies in terms of: the steel sector, because the steel industry?s consumption is likely to grow between 6% and ? Equipment Replacement 8% during this year. ? Engineering Solutions ? Energy Saving Solutions Luis Zamudio Michielsen, AHMSA General Director, confirms that the steel and iron ArcelorMittal international crisis reversion is being boosted The biggest steel producer in the world is mainly because of a revival in industrial planning to invest $1,600 million USD in a new demand in the United States, Europe and Asia, factory. Production will be targeted specifically especially in the building industry. to the automotive industry and construction. ArcelorMittal, one of the private companies Business Opportunities for steel trade in the leading natural gas and electricity following sectors: consumption in Mexico, are analysing the fourth gas processing instalment to import ? Automotive industry sector and natural gas from other regions in the world, to building industry increased 79% and assist the company?s needs, and to guarantee 16% respectively compared to last year. the fuel supply for future expansion of the current factories. ? Major appliances industry has been increasing since the last quarter of Ternium 2009. The Institutional Relations Ternium is planning a new flat rolled steel Director of MABE, Rafael Nava, confirms mega-factory instalment, one of the most that the growth of the major appliance ambitious projects in the Mexican iron and sector was lead by Programa de steel industry with an investment of 4 sustitución de equipos (Equipment thousand 200 million US dollars for this new Replacement to save energy) by the factory. Federal Government, which resulted in an increase in refrigerator sales Tenaris Tamsa throughout the country. It was Tenaris Tamsa will continue its project for the estimated that there was a 5% growth instalment of the pipe production factory in in MABE production that included Veracruz. The new factory requires an washing machines, ovens refrigerators, investment of one thousand 600 million US dish washers and clothes dryers, which dollars to produce steel pipes from 1.5 to 7 are steel dependants. inches, specifically for the superficial oil wells. The project is oriented to the Chicontepecc ? Electric equipment is also growing in wells (oil field in the south of Mexico) that need terms of production. Jose Francisco the required pipe specifications. Gómez, Carrier residential division director, declared that this enterprise is AHMSA expected to grow 10% compared to The company will experience a growth of 40% 2009. of its steel production capacity through a billion UK Trade & Investment Sector briefing: Steel opportunities in Mexico dollars investment. With this project the staff overseas in British Embassies, High capacity will rise from 500 thousand to 1 Commissions and Consulates, across all sectors million tons per year. The project?s name is and in over 100 markets. ?Fénix?. You can be alerted to business opportunities on R & D opportunities for the steel industry a regular basis by registering on the UKTI in Mexico website. Find out more on UKTI?s business The iron and steel industry in Mexico is opportunities service on the UKTI website. experiencing intellectual challenges; there are great problems to be solved with technical and economical solutions, but to find specialised labour is becoming the greatest challenge that requires participation not only from companies but from universities too. Companies are open to R&D centres and universities that can provide the know-how or knowledge in different fields such as: ? New technology ? Composites material ? New applications ? Demand and price forecast, among others Environmental Solutions for the Steel Sector The steel sector is implementing projects in Mexico to contribute to the international trend of finding environmentally friendly solutions for its process and products. The following are areas in Mexico with potential opportunities for UK companies: Raw Material Reduction: Steel producers are implementing projects where they can provide finished products with high quality and better properties using smaller amounts of raw materials per item. Industries such as construction and automotive require this type of product in order to compete and comply with international environment regulations. Energy Saving. Find processes, machines and systems where steel producers and foundries require less energy input per steel ton produced. Recycling. Use of scrap steel is increasing in local steel producers. Some local buyers are getting products from the USA and Europe due to the free trade agreement benefits. If you have any questions on the opportunities above, contact the UKTI contacts named in this report. Business opportunities aimed specifically at UK companies are added daily to UKTI?s website. These leads are sourced by our UK Trade & Investment Sector briefing: Steel opportunities in Mexico Major events and activities UKTI contacts Find full details of all events in this When considering doing business in Mexico it is country and sector on the UKTI website. essential to obtain legal, financial and taxation New export events are added daily to the site advice. A useful contact list of lawyers and and you can register to be alerted to them on a other relevant professional bodies as well as daily, weekly or monthly basis further tailored information on the sector is available from the UKTI team in Mexico City. UKTI?s Tradeshow Access Programme (TAP) For further details, please contact: provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend Jonathan Clare trade shows overseas. Find out more about Trade and Investment Consul UKTI support for attendance at overseas British Consulate, Monterrey events Tel. +52 (81) 8356 5359 Fax +52 (55) 8356 5379 Email: Luis Dario Ochoa Trade and Investment Office British Consulate, Monterrey Tel. +52 (81) 8356 5359 Fax +52 (55) 8356 5379 Email: UK Trade & Investment Sector briefing: Steel opportunities in Mexico Next steps - How UKTI can help ? Arranging appointments British companies wishing to develop their ? Organise seminars or other events for business in the Mexican market are advised to you to meet contacts and promote your undertake as much market research and company in the Mexican market planning as possible in the UK. UKTI?s team in Mexico, with its wide local knowledge and This work is available via our Overseas Market experience, can provide a range of services to Introduction Service (OMIS) a chargeable British-based companies wishing to grow their service which assists British-based companies business in global markets. wishing to enter or expand their business in overseas markets. This can include: ? Provision of market information To find out more about commissioning this ? Validated lists of agents/distributors work, or accessing other UKTI services and ? Key market players or potential specialist advice, please visit the UKTI website customers in the Mexican market to find contact details for your local UKTI ? Establishment of interest of such office. contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2010 by UK Trade & Investment. Crown Copyright © UK Trade & Investment Sector briefing: Steel opportunities in Mexico
Posted: 20 January 2011, last updated 22 February 2011

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