Mexico’s Steel Producers Are Ready to Meet the Rising Demand
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Mexico’s Steel Producers Are Ready to Meet the Rising Demand

Photo by:   Karana Bhatia
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Fernando Mares By Fernando Mares | Journalist and Industry Analyst - Mon, 02/20/2023 - 17:13

After the announcement of a potential Tesla investment in Mexico, steel producers expressed their willingness to participate in the company’s production supply chain. The steel sector stated that it is prepared for the forecasted increase in demand and is ready to other companies, too, as it has the required technology.

According to Stefano Maggiolino, President, the Technological Association of Iron and Steel (AIST), the industry responds quickly to changes, which makes it possible to react to sudden demand increases. “If you want to picture it in reverse, if there are potential investments in Mexico’s northeast it is because those companies know that there is already a supply chain here, as well as talent and distribution capabilities,” Maggiolino said. 

Jaime Luján, Director of Flat Steel Sales, ArcelorMittal, agreed and said Tesla issued a tacit vote of confidence in Mexico’s steel producers. “We cannot speak for them, but they showed confidence... I think that AIST members are ready to meet [Tesla’s] demand. 

Maggiolino noted that the steel demand may also increase due to other companies and reaffirmed the readiness of the Mexican steel industry to supply various types of steel, such as electrical and silicon steel, made possible due to the country's strong technological base.

According to Luján, all of Mexico’s states are involved in the steel industry to some extent, although most of the production is concentrated in the north, particularly Nuevo Leon and Coahuila as well as Michoacan, whose steel industry has been growing owing to important investments of ArcelorMittal. San Luis Potosi, Puebla, Hidalgo, Tlaxcala, the State of Mexico, Baja California and Jalisco participate to a lower but no less important degree. 

AIST forecasts that steel production will reach the 19.5Mt milestone to export over 4.9Mt in 2023. Mexico exports an average of 5Mt of steel every year. 

According to the National Chamber of the Iron and Steel Industry (CANACERO), the industry must prevent a disbalance between steel imports and export to ensure a healthy steel sector by focusing on producing for national consumption. CANACERO noted that despite the sector’s 8.5% growth between 2020 and 2021, it will grow only 0.2% in the coming years.  

Mexico is the world’s 15th largest steel producer. According to CANACERO, every tonne of steel produces 1.28t of CO2, which is 30% less than the global average. Over 38% of the national steel production is based on recycling while the global average totals 23%. 

Photo by:   Karana Bhatia

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