The health of steel industry in Mexico:

Transcription

1 The health of steel industry in Mexico: What is threatening it, and how is scrap trade being affected? Javier Perez, COO, Reciclacentro, Mexico New Orleans, LA, Sep 2041

2 Reciclacentro. Who we are? We have 45 years of experience along three generations. We are scrap processors, focused on industry, actually delivering scrap to several mills in Mexico. We handle ferrous & non ferrous scrap and non metallics. We support Omnisource s operations in Mexico as service partners.

3 Reciclacentro. Who we are? Mision: To provide an integral handling service of recyclable materials, profitable in economic terms, that promotes a positive environmental impact and furthermore, to benefit our society. Vision: To be a leading company in collecting and processing recyclable materials, highly efficient and effective with the highest quality standards, able to offer solutions to international organizations. Our Values: Responsibility, Respect, Commitment, Honesty, Integrity

4 Locations: 3 locations in central & Southeast Mexico: Puebla, Toluca and Chetumal. Contact information: info@reciclacentro.com

5 What is the current demand for scrap in Mexico?

6 What is the current demand for scrap in Mexico? Mexico s estimated crude steel capacity at the end of the year 2014: 26.5 Million T. New additions: Ternium (Nuevo Leon), Gerdau (Hidalgo), TA2000 (Veracruz), AHMSA (Coahuila). Year to Jul 2014 crude steel production in Mexico: Million T (World steel) Utilisation ratio: 73.5%

7 2013 Raw materials supply in Mexico Import scrap, 11% Local scrap, 31% Iron Ore, 58% Total: 19 MMT. Sources: Canacero, World steel & others.

8 Iron ore production: To consume or to export? Export: 29% Local consumption: 71% 2012 figures from World steel

9 Iron ore production: To consume or to export? As reported by the US Energy information Agency (EIA), Mexico has a total of 681 trillion cubic feet of technically recoverable shale gas resources, which places it sixth in the world figures from World steel

10 How will the recent US import tax ruling impact the health of the Mexican steel industry?

11 How will the recent US import tax ruling impact the health of the Mexican steel industry? On April 21, 2014, the U.S. Department of Commerce announced its affirmative preliminary determinations in the antidumping duty (AD) investigations of imports of steel concrete reinforcing bar from Mexico and Turkey. A final ITA decision in this case is due Sep 9 th. The US International Trade Commission has scheduled a sept 15 th hearing on whether U.S. rebar producers have been harmed by exports.

12 How will the recent US import tax ruling impact the health of the Mexican steel industry? PRELIMINARY DUMPING MARGINS SET APRIL 21, 2014: Country Exporter/Producer Dumping margins Mexico Deacero S.A.P.I % de C.V. Mexico Grupo Acerero 66.70% S.A. de C.V. Mexico Grupo Simec 10.66% Mexico All Others 20.59% Average 29.64% Source: US department of commerce, International trade administration

13 How will the recent US import tax ruling impact the health of the Mexican steel industry? REBAR IMPORTS FROM MEXICO, 2014: MONTH 2014 TONNES APRIL 13,287 MAY 114 JUNE 83 Source: US department of commerce, International trade administration

14 Will demand for scrap from the US be impacted?

15 Mexico Outlook for Steel industry. Factors to consider. Auto industry investments announced: Audi, Mazda, Kia, Honda, Nissan-Daimler. Growing auto exports: 7% up year to year (may 2014) Mexico, # 8 world car assembler and #4 car exporter (3 million units). Growing need for high quality finished auto steel.

16 Mexico Outlook for Steel industry. Factors to consider. Estimated GDP growth for 2014: 2.3% (World bank). Mexican Government: 2.7%. Recently released energy reform. Increased private investment. New infrastructure needed. Experts say, this reform will release government public expense, after congress parties reached an agreement.

17 Mexico Outlook for Steel industry. Factors to consider. Junk car yards released by the government. Estimated amount: Half million tonnes. Prime, secondary grade exports leaving our country, estimated: 1.5 M.T. for Decreasing ferrous scrap trade balance. Prime grade scrap surplus because of auto industry.

18 Challenges, opportunities for steel industry in Mexico High energy costs Low added value products Asian imports US imposed dumping margins Growing availability of prime grades scrap Iron Ore mines Ongoing energy cost reductions because of energy reform & shale gas availability Growing auto industry

19 Final balance on the see-saw Import demand from US to stay flat or decrease.

20 A perfect mix. Iron Ore Shale gas Auto industry Prime grade scrap surplus New infrastructure required