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ArcelorMittal Turns Up Heat in Mexican Steel, Metal One Has the Most to Lose

Japan 505 Materials - Metals/Mining 616 Metals - Steel 428 South Korea 492 Tariffs 1614 U.S. 4478

Steel manufacturer ArcelorMittal will invest $1 billion over the next three years to expand its facilities in Cárdenas, Mexico. The new mill will produce 2.5 million tons of hot-rolled steel coil for Mexican, non-automotive sector applications, compared to Arcelor’s 4 million tons of steel currently.  

The commitment to domestic sales should avoid risks associated with the ongoing review of U.S. steel imports – the long awaited “section 232”, as outlined in Panjiva research of September 22 – and could instead displace imported steel.

Panjiva data shows the decision to build a new facility is likely a response to growing demand with imports having increased by 24.7% in the past quarter (to August 31) on a year earlier, and by 9.0% annually for the past three years. That’s been led by an expansion in shipments from Japan (37.1%) and South Korea (36.9%). It has also come at the expense of U.S. steel mills, which saw growth of just 7.6% annually, though they saw faster growth recently of 17.2%.

HOT COIL ROLLS IN

Chart segments Mexican imports of hot-rolled steel coil by country of origin and sale. Source: Panjiva

The new mill could have a significant effect on consignees – total imports were 6.1 million tons in the past 12 months. ArcelorMittal’s own imports were just 5.8% of the total – including its joint venture with Nippon Steel – limiting the “cannibalization”.

The regional port at Lázaro Cárdenas will lose out if imports are cut. Panjiva analysis of 240 port-country pairs shows it accounted for 10.2% of imports in the past year, with shipments from Japan accounting for 82.2% of shipments. Distributor Metal One will face the biggest challenges as a consequence. The specification of the region as a special economic zone, and three year roll-out of the new steel mill, should mean the recent expansion of the Cárdenas port facilities should not go unused for long.

JAPAN THE LIKELY BIGGEST LOSER FROM A CARDENAS STEEL MILL

Chart segments Mexican imports of hot-rolled steel coil by country of origin and arrival port. * Intra-national shipments shown. Source: Panjiva

Update 10/03: Report corrected for ArcelorMittal’s share of Mexican imports. The original recorded 0.5% of the total, which excluded its joint venture with Nippon Steel in Alabama, U.S.

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