Steel sector backs Mexico reforms

Monday, November 24, 2014

Mexican steel industry chamber Canacero backed President Enrique Peña Nieto's reforms, which the group says will help producers compete globally.

The energy reform, which opens up electricity and oil and gas production to greater private sector involvement, was highlighted as of particular importance to steelmakers, given that electricity and fuel makes up about 25% of production costs, the chamber said in a press release.

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As a result of the reform, a number of metals and mining companies are investing in energy projects, including manganese and ferroalloy producer Minera Autlán, which recently announced plans to invest US$150mn in wind and hydropower plants.

The reform is expected to lower electricity costs and spur investment in the oil and gas sector, which could in turn boost demand for steel products, including steel tubes for pipelines.

In addition, Canacero said fiscal, labor, telecom and education reforms will help steel producers compete against overseas rivals, many of which benefit from government protection or subsidies.

The steel sector will also benefit from infrastructure investments in the country, particularly through rules requiring major national projects to source materials from within the country, the release said.


The government is also taking steps to protect Mexican steel producers from unfair trade practices by foreign companies, Canacero added.

A number of antidumping investigations have been launched in recent months into steel imports, including a probe into hot-rolled steel imports from France, Germany and China, while antidumping duties were imposed on Chinese steel plate and mesh in October.

The chamber also backed government efforts to combat illegal iron ore mining, with drugs cartels reportedly exporting millions of tonnes of the mineral from unlicensed mines, particularly in Michoacán and surrounding states.