The Mexican steel industry is operating below 60% of installed capacity because of unfair competition from imports, the president of Mexican steel chamber Canacero said Monday.
"Even in 2014, when steel use grew 12.2% in Mexico -- and will keep increasing in 2016 to reach 24 million mt of rolled steel, according to the World Steel Association -- consumption is being supplied mainly by imports, which jumped 19.5% last year, especially from China, Japan and South Korea," Guillermo Vogel said in an interview released by Canacero on Monday. He is also vice chairman of tube maker Tenaris Tamsa.
The country's steelmakers invested about $4 billion in 2010-2015 to add 6 million mt/year of installed capacity.
"Unfortunately, this capacity is underused because the higher demand is being met by imports that come under unfair prices," Vogel said. "The main risk is that the companies avoid investing in the future."
The executive stressed the impact on the local tubes market.
"The favorable effects [to demand] generated by the reforms [promoted by the government in the energy sector] started to be seen in 2014 with the boom in demand for tubes for oil pipelines, but the use of imported material was 42% higher than Mexican-made tubes," he said.
Source: Platts