During the recent Alacero 58 Congress, SteelOrbis had the opportunity to listen to the strategies of the Mexican steel firms directly from seven executives both in panel format and on the sidelines of the event, including CEO Victor Cairo of ArcelorMittal Mexico, General Director of Altos Hornos de México (AHMSA) Luis Enrique Zamudio, General Director of Autlan Oscar Maldonado, Executive Director Gerdau Corsa Fabricio Menegoni, General Director Tenaris Tamsa Sergio De la Maza, Executive President of Ternium Maximo Vedoya, and Director of Institutional Relations for Deacero Juan Antonio Reboulen.
Per the recent press release from Alacero, steel demand in Latin America is expected to strengthen along with general economic activity. From sideline discussions, SteelOrbis was informed of slow growth expected in 2018 due to investment lags caused by both NAFTA renegotiations and the Section 232 investigation from the US, but also upcoming Mexican elections. However, there was still confidence that regardless of the outcome, Mexican firms are establishing themselves for growth with substantial capital investments, a focus on innovation, and continuing to address unfair trading practices. Regarding US trade, they are confident on US demand, low tariffs, if any, and their competitive advantages.
Investments mentioned by the various companies included the opening of modern mill facilities, expansion and modernization of mining assets, investment in research and development, and human development. The investment in human capital was exemplified by De la Maza as he explained the move of Tenaris Tamsa toward a more customized customer service value-added program. He mentioned that his firm has often sent teams to sites facing problems with some facet of their overall project and Tenaris engineers have been able to customize solutions that have directly addressed customer problems, especially in oil and gas exploratory settings.
Additionally, firms mentioned “just in time” (JIT) models, innovation in steel products, and rebuilding inter-regional trade throughout Latin America.
Cairo noted that 50 percent of flat steel is presently supplied into the Mexican market through imports. While China’s proportion of Mexican steel imports has declined, he commented that the supply was replaced with Japanese and South Korean steel.
Mexican executives are confident of their ability to recapture some of the domestic steel demand that is presently satisfied by imports in a fair trade setting. Mengoni stated, “Some are importing from countries that are not meeting standards either environmentally or in production. The product is inferior and it is giving them the competitive advantage. We need better data and analysis to make the playing field fair including in regards carbon taxes.”
Reboulen reinforced the need to minimize volatility at the political levels throughout Latin America and specifically regarding Mexico’s elections. “Volatility affects business investment,” he said. On a public policy basis, he suggested an industry focus on science and technology education and infrastructure spending.