Steel sector in Mexico

Mexico is the 2nd largest steel producer in Latin America and is considered to be in the top 13 largest steel producers in the world. Its consumption is almost the same as Brazil. The country is a huge steel consumer, and steel products are also exported, obtaining a value of US$25,760 (Source: Canacero, 2012).

Market overview

In 2012, the Mexican steel industry continued to show an improvement with an average growth of 6.1% per year. The Steel sector generates around 53,000 direct employment opportunities. It represents 2.6% of total GDP, 7.9% of industrial GDP and 15.1% of manufacture GDP.

The steel industry is a big consumer of power (7% of the national production), natural gas (21.9% of national consumption) and it is also an important client for railroad services. Mexican steel exports are 5.2 million metric tons and imports are 6.1 million metric tons.

NAFTA has created a closer trade relationship between Mexico, the United States and Canada; causing a benefit in the exchange opportunities and benefiting suppliers considering the stable prices and healthy profit margins.

Mexico is an appealing steel producer, the increasing foreign investment encourage major players to show interest in the Mexican steel sector. It is considered that within the next 4 years (2012-2015) the steel industry in Mexico will invest US$11.5 billion to increase production capacity and modernise their plants.

In the next five years, the ironworks sector in Mexico will invest about US$10 billion to diversify their products and for import replacement. Mexico’s capacity of steel production will grow to over 30 million tons by 2013. This is 36% more than the actual capacity, which is 22 million tons.

The Mexican steel industry continued to show an improvement in the early part of 2011. Growth has steadily risen since last year; studies show growth to be 80%. The Mexican steel industry will face increasing headwinds over the coming months.

The president of the National Chamber of the Iron and Steel Industry (CANACERO by its Spanish initials), states that there are great expectations for the steel sector. The steel industry’s consumption is likely to grow between 6% and 8% during this present year.

The main Mexican states of steel production are;

Nuevo Leon, with export figures in 2011 of US$2.8 Billion
Coahuila, with 2011 foreign direct investment calculated in US$75 million; and
San Luis Potosí, although a small market, is home of the largest and fastest growing manufacturing companies in the country.

Key opportunities

The automotive industry and construction sector increased 79% and 16% respectively compared to last year.
Electric equipment is growing in terms of production. This enterprise is expected to grow 10% from 2012 compared to 2010-2011.
In construction, building investment was reported to be 23% higher than last year.
The industry’s continued modernisation of its equipment, productivity of its workers, and creation of more effective management structures, generates a more reliable surrounding for investment.
Authorities and business people work to consolidate the competitiveness of the steel industry. The goal is to help create and maintain a cutting-edge industry with the ability to develop itself in an environment of fair competition. Also, an industry that contributes to the strengthening of the country’s chain of production, including those small- and medium-sized businesses.

Latest export opportunities in the Steel sector

Latest export opportunities – Mexico

Getting into the market

R & D opportunities for the steel industry in Mexico:

The iron and steel industry in Mexico is experiencing intellectual challenges. There are great problems to be solved with technical and economical solutions, but to find specialised labor is becoming the greatest challenge. This requires not only participation 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 technologies
Composites material
New applications
Demand and price forecast.

Environmental Solutions for the Steel Sector

The steel sector is implementing projects in Mexico to contribute the international trend of finding environmentally friendly solutions for their process and products. Following are the areas in Mexico with potential opportunity 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 requires this type of products in order to compete and comply with international environment regulations.
Energy Saving: Research 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 agreements benefits.

More about doing business in Mexico

Contacts

Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).

To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.

• Sarah Hildersley, Trade and Investment Consul British Consulate, Monterrey. Tel. +52 (81) 8356 5359 or email: [email protected]

Alejandra Rodríguez, Trade and Investment Office British Consulate, Monterrey. Tel. +52 (81) 8356 5359 or email: [email protected]

Contact your local international trade team

UKTI Events

UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.

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