Steel Production Increases by 23 percent
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Steel Production Increases by 23 percent

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Karin Dilge By Karin Dilge | Journalist and Industry Analyst - Tue, 11/15/2022 - 16:52

The incorporation of new steel production capacity in Mexico increased the national production of flat steel by 23 percent in 2022 and permitted the country to lower imports by 9 percent. Moreover, exports grew 98 percent, according to Daniel Riojas, Assistant Director, Altos Hornos de México.

Riojas detailed that the increase in flat steel exports indicates that the domestic demand has not completely accounted for the new capacity, particularly in hot and cold rolled steel. The exports of hot rolled steel increased by 265 percent and steel plate in roll by 668 percent from January to September 2022 in comparison to the same period in 2021.

“From December 2021 to May 2022, consumption grew from 1.1 to 1.5 million tons a month, and after that it declined to 1.3 million tons in September, accumulating a 2 percent decline in the first nine months of the year in comparison to the same period in 2021,” said Riojas.

A factor that contributed to the fall in demand for these products was the decline of activities in the construction and infrastructure industries as opposed to the manufacturing industry. Inside the manufacturing industry, the sectors most related to steel consumption purchased more steel, especially the transportation sector, which saw a 12 percent increase in its activities since February.

Regionally, the construction sector contracted 3 percent during 1Q22. The automotive industry shrank 1.7 percent, according to ALACERO data. Despite the narrowing, the organization does not see a downward trend and said that it could recover in 2023 with an estimated growth of 4 percent.

Riojas pointed out that from April to October 2022, the price of hot rolled steel has slightly decreased in comparison to other regions, despite a greater domestic supply. In April, the price of hot rolled steel was around US$1,350/t, and it currently stands at US$827/t. 

In July, the Latin American Steel Association (ALACERO) reported that steel demand in Latin America would fall by over 2 percent in 2022 due to three major factors: the Russian invasion of Ukraine, which has caused a surge in energy prices, inflationary pressures and unpredictable election cycles in the region have caused the largest steel-consuming industries like the construction sector to shrink during 1H22.

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