Investments of US$11 billion by leading Mexican flat steel producers for this year are focused on expanding market share in automotive and sectors in which the industry is highly competitive globally, such as hot rolled with new grades, dimensions and specifications.
Last week, Volkswagen announced that it will manufacture its top-selling Golf hatchback in Mexico at its Puebla plant. Armin Plath, head of research in materials and workmanship said that it is using increasing amounts of high strength steel, which are "a very cost effective way to reduce weight," he said to news agencies.
VW has quadrupled the amount of high-strength steel used in the Golf model. Meanwhile, VW spokesman Christian Buhlmann said that costs are the most important factor in choosing the material. "By using new innovations in engineering steel (...) it is possible to reduce the weight without the use of more expensive materials such as aluminum and carbon fiber."
The move to build the Golf at its Puebla plant in 2014 is part of VW's ambitious plan to sell 1 million vehicles in the US by 2018 and overtake General Motors and Toyota as the world's largest carmaker by sales. Over the next three years Volkswagen plans to invest more than US$5 billion in North America, including a new Audi plant in San José Chiapa, Mexico.
The behavior in apparent domestic consumption of flat steel in Mexico during the last two years and the forecast for 2013 is already generating interest. Domestic consumption of hot rolled coil (HRC) grew 18.5 percent in 2012 (3.563 million tons) compared with 2011 (3.006 million tons). By 2013, consumption forecast is expected to be 3.747 million tons, an increase of 5.2 percent.
For cold rolled coil, consumption in 2013 should grow 8.4 percent (3.394 million tons). At the end of 2012, CRC consumption was 3.131 million tons, an increase of 4.6 percent, compared to 2011, when consumption was 2.994 million tons.
Consumption growth of flat steel was caused primarily by an increase in imports. According with the last report National Chamber of Iron and Steel Industry (CANACERO), for the third quarter of 2012, the HRC production was 2.164 million tons, while consumption amounted to 2.706 million tons. Imports totaled 694.727 million tons and exports totaled 152.055 million tons.
For CRC in the same period, production was 1.958 million tons, while apparent consumption was 2.339 million tons. Imports were 485 million tons and exports amounted to 104.941 million tons.