Ternium opposes move by Korean steelmakers to increase CRC exports to Mexico

Mexican steelmaker Ternium has opposed a move by Korean companies to review an existing CRC quota import deal signed with POSCO and Hyundai Hysco.

In late May, Mexico indicated the country was reviewing a CRC quota import deal that had been signed with POSCO and Hyundai Hysco Co, as KIA Motors has just started up auto production at its Pesqueria plant in the state of Nuevo Leon.  Plant officials indicated they would need to exceed the limit set by the Mexican government in order to meet auto production rates.

“Expanding Korean steel imports to Mexico would represent a regression and would, invariably, be against the local [steel] industry,” Ternium said this week, adding the US has applied a 47.8 percent CVD over steel imports from Hyundai Steel.

In December 2013, both POSCO and Hyundai Hysco Co reached a CRC import deal, in which Hyundai Hysco limited its CRC exports to Mexico to the following annual quotas: 10,000 mt in 2014; 15,000 mt in 2015; 20,000 mt in 2016; 25,000 mt in 2017, and 30,000 mt in 2018.

POSCO committed itself to the following quotas: 400,000 mt in 2014; 450,000 mt in 2015; 480,000 mt in 2016; 500,000 mt in 2017, and 500,000 mt in 2018. Both companies agreed to export the product at non­injurious prices.

As a result of the deal, Mexico's economy secretariat (SE) suspended the provisional AD duties that had been previously established.

However, Hyundai Steel requested on December 21, 2015 that the Mexican government to review the quotas agreed by Hyundai Hysco, since a Hyundai­affiliated company, KIA Motors, decided to invest in Mexico and would then need to use a specific amount of CRC for automotive use.

KIA Motors should need 10,000 mt of CRC of automotive quality in 2016, 30,000 mt in 2017 and 40,000 mt in 2018.

According to the document, Ternium is expected to become a provider of steel products, including CRC, for KIA Motors in Mexico, however, the Mexican steelmaker can’t provide the product within the specifications provided by Hyundai Steel México, one of the Hyundai Motor Group companies.

Ternium has denied the claims and said it has conditions to “locally meet KIA’s specifications in Mexico.”

Ternium said it supplies steel to KIA in a regular basis since Q4 2015, when KIA started consuming steel in Mexico. Ternium is said to supply about 30 percent of KIA’s steel needs in the country.