Mexican steel and aluminum producers were under pressure to reduce natural gas consumption, but many of them ended up suspending production as operating with lower gas levels was unsustainable and lossmaking for them.
The country's natural gas association AMGN, called on industrial, commercial, and residential users on Feb. 17. to temporarily reduce consumption following the power blackouts in seven northern states.
"This reduction will help the industry and government to prioritize the service to strategic facilities, such as hospitals and clinics, as well as operating conditions for the Integrated National Natural Gas Transportation and Storage System, or SISTRANGAS, to be re-established as soon as possible, for the benefit of all consumers of natural gas in Mexico," AMGN said in the statement.
According to several sources from the steel and aluminum sectors, they were requested to lower natural gas consumption by 80%-100% -- which was not sustainable to maintain operations.
Though it is too early to exactly estimate the impact of such a cutback, sources expect metal availability to be limited in the following weeks.
"In the best case scenario, we will have gas by [Feb. 19], but there is no clarity at all," a steelmaker source said.
The natural gas usage was curtailed after frigid temperatures in Texas reduced natural gas output and Mexico was unable to import the 4 Bcf/day of natural gas it sources from the US, according to the Federal Electricity Commission.
According to CFE, roughly 60% of the electricity produced in the country is generated with natural gas, most of which is imported from the US through a system of pipelines.
Source : https://www.spglobal.com/platts/en/market-insights/latest-news