News
11/02/25
Mexican steel faces few outlets in wake of US tariffs
Houston, 11 February (Argus) — Mexican steelmakers, facing sluggish domestic
demand, could struggle to find outlets for production after the elimination of
US steel tariff exemptions. US president Donald Trump on Monday revoked all
exemptions from the 25pc steel import tariff, effective 12 March. Canada and
Mexico as part of the US-Mexico-Canada Agreement (USMCA) were exempt from
Section 232 25pc steel tariffs announced in 2018, along with Argentina,
Australia, Brazil, the EU, Japan, South Korea and the UK. The renewed 25pc
tariffs also include "derivative steel articles" — downstream and value-added
products. Mexico also faces the potential imposition of a 25pc all-goods tariff
in March by the Trump administration. Originally meant to be imposed on 1
February, the tariff was delayed by 30 days on 4 February. Should the tariff —
which only included Mexico and Canada — be imposed at the end of the
postponement, US buyers could face a 50pc tariff on Mexican steel. More Mexico
capacity looms The gap left by the imminent exit of the US as a free trade
partner leaves Mexican steelmakers with few obvious outlets as a slew of
incoming capacity expansions are poised to bloat domestic inventories. Mexico
produced 18.2mn metric tonnes (t) of steel in 2024 , down from 19.85mn t in 2023
as steelmakers pulled back production to counter weak demand, according to
Mexican steel association Canacero. Mexico exported 3mn t of steel in 2024 —
2.3mn t of which went to the US, according to Canacero. That was followed by
Canada, which imported just 118,000t in 2024, and Saudi Arabia, which imported
90,000t. Still, Mexican mills are expected to add more than 5mn t/yr of
additional steel production by the first half of 2026. About half of that will
come from steelmaker Ternium's slab mill in Pesquería, Nuevo León, which is
expected in the first half of 2026. The Ternium slab mill's location in northern
Mexico was meant to help supply steel to the USMCA region . Some in the market
more recently told Argus that the new tariffs would have very little effect on
Pesquería's strategy — positing that the slab produced there could be exported
to Ternium's facilities in Brazil. Still, Mexico only exported 27,000t of steel
to Brazil in 2023 and it was not listed as a top-10 export partner in 2024. Long
steelmaker Deacero in 2023 also announced a $1bn expansion over three years to
grow production by 1.2mn t/yr. Deacero's expansion, too, was aimed at meeting
expected nearshoring-driven demand in the medium and long term. In 2023, long
steelmaker Simec announced a new 500,000t/yr rebar mill and Brazilian steelmaker
Gerdau in May announced it was exploring sites for a 600,000t/yr special steel
mill in Mexico. Slow demand adds further pressure In the absence of overseas
demand for steel, Mexican steelmakers could have to look to a shaky domestic
market to offload production. Federally funded infrastructure projects like the
Tren Maya, the Olmeca Refinery in Tabasco and the Felipe Ángeles airport near
Mexico City either wound down or concluded by 2024. The projects took with them
a boon in steel demand and production that faded further as buyers were
reluctant to commit to tons before the general elections in June 2024. That
demand has yet to recover. Mexican president Claudia Sheinbaum, who took office
in October, campaigned partly on the construction of 1mn homes — which would
require an uptick in rebar consumption. Sheinbaum is expected to announce her
full infrastructure plan on 17 February. The market has few other options for
Mexican-produced steel should the government not adopt publicly funded
steel-consuming projects as the country faces expectations of slower economic
growth this year. Nearshoring efforts, including plans for domestic production
of electric vehicles (EVs) from both Chinese EV makers and US automaker Tesla,
have stagnated. A wider count of new foreign direct investments in Mexico shrank
last year to the lowest level since 2014 . Sheinbaum on Monday confirmed that
the Mexican government learned of the steel tariffs from media outlets. Any
previously discussed retaliatory measures would come after a clarification of
the tariffs, Sheinbaum added. By Marialuisa Rincon Send comments and request
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