Ahmsa threatens investment freeze as steel tariff ends

Mexican steelmaker Ahmsa will freeze US$200mn of investments unless the government reinstates a tariff on imports, its chairman Alonso Ancira said in a stock exchange filing.

The 15% duty, which ended on January 31, had offered Mexico's steelmakers some protection from the challenges posed by Chinese overcapacity and a 25% US tariff imposed on Mexican shipments last year.

The 15% tariff on more than 100 steel products was first imposed in 2015 and subsequently extended for six-month periods.

As well as freezing investment, Ahmsa will be forced to cut its workforce by about 10% unless the duty is restored, Ancira said.

He also called on the government to widen the tariff to include US shipments, raise the rate to 25% to mirror the US duties, and extend it to all steel products.

Ahmsa has missed out on around US$250mn of export revenue as a result of the US tariff, the company said.

"Because of this barrier [US tariffs] neither us nor our clients have been able to export to the North American market, and exports from North American to Mexico have grown," Ancira said.

"It is necessary to put us on an equal footing to be able to do business given the current situation, and [the tariffs] even put at risk the signing of the [US-Mexico-Canada] trade agreement."

Steel chamber Canacero warned previously that without its own import duties Mexico will be seen as a "platform for triangulation," with overseas producers seeking to sneak low-cost steel through the country to the US, which could in turn undermine support for the trade agreement in the US congress as the House of Representatives has made elimination of the Trump-imposed tariffs a condition of approval.

Ahmsa is one of Mexico's biggest steel producers, with 2018 output of 4.52Mt liquid steel.