Maximo Vedoya, CEO of Ternium, said he is expecting an increase in Mexican steel consumption of about 4.3 percent in 2023, compared to last year, a forecast that surpasses the 2.5 percent increase in consumption projected by the World Steel Association, according to company information seen by SteelOrbis.
Vedoya attributed the higher expected consumption level to the relocation of steel-consuming manufacturers, mainly from Asia to Mexico.
In a virtual meeting with investors, Vedoya said, “The nearshoring is something that is happening and it is doing so faster than we expected. The 15 percent increase in the flat steel industrial market in Mexico is also linked to this dynamic. The pace of investment in the north of the country has been very significant, and it has so far captured more than two-thirds of the total nearshoring demand coming to Mexico. This is reflected in our updated expectation for steel consumption in Mexico in 2023, with a growth of 4.3 percent compared to 2022, World Steel SRO (short-range outlook) previous estimate released in April was 2.5 percent.”
The relocation of companies from Asia to Mexico is reportedly due to the trade conflict between the United States and China. Recently, the international credit risk evaluator Fitch Ratings estimated Foreign Direct Investment (FDI) in Mexico could total $80 billion in the next three years.
Data from the Mexican Chamber of the Iron and Steel Industry (Canacero) show that in 2022, the consumption of finished steel products was 24.8 million metric tons.
Vedoya commented on the increase in steel consumption. He said that before construction began on its Ternium Industrial Center in Pesquería, Nuevo León, Mexico’s manufacturing industrial sector accounted for 50 percent apparent consumption of flat steel and in 2022 accounted for 66 percent.
He also acknowledged that much of Mexico’s flat steel consumption depends on imports, which represent around 40 percent of the market. Although he said that his investments will better serve his clients in the automotive, renewable energy and home appliance industries, among others.
The Pesquería plant began operations in 2013 with an initial investment of $1.12 billion and they recently announced that it will build a new $3.2 billion steel mill that will be in operation in the first half of 2026.
The executive said that they see new investments in the automotive industry, auto parts, household appliances, electric motors; heating, ventilation, and air conditioning (HVAC). They all consume steel.
Vedoya also spoke about his indebted business rival Altos Hornos de México (AHMSA). With the public information that exists, he said that “it is very difficult” for AHMSA to return to the production levels it had when it stopped, which would be between 300,000 and 350,000 tons per month.
“It is very difficult for AHMSA to have that number again in the near future.” He considered that the damage to the company's assets (coking plant) due to a blockade by the workers “is something that you can fix in two or three years.”
Recently, SteelOrbis published that the blockade of the entrances to the steel company by a union of workers without labor representation, prevented the supply of gas, this damaged the company’s coking plant.