US steel tariff exemption boosts Ahmsa in 1Q

Mexican steelmaker Ahmsa expects Mexico's exemption from the US steel tariff to boost second quarter sales after helping lift shipments in the first quarter by 18pc from a year earlier.

The exemption has "stimulated the Mexican steel market" and drove record steel shipments in March, Ahmsa chairman Alonso Elizondo said.

"We can already see these benefits reflected in [first quarter results]," Elizondo said. "This is a trend that we expect will continue in the coming months."

The US this week extended Mexico's temporary exclusion from its 25pc tariff on imported steel until 1 June as the countries negotiate permanent exclusions in conjunction with ongoing North American Free Trade Agreement (Nafta) talks.

Coahuila-based Ahmsa shipped 1mn t of steel in the first quarter, up from 856,000t in the same period a year earlier on stronger flat product shipments.

Flat product shipments rose by 24pc to 937,000t, while coated product shipments rose by 17pc to 35,000t. Shipments of structural shapes fell by 44pc to 40,000t on the quarter.

Hot-rolled coil represented 60pc of sales on the quarter, with plate accounting for 20pc and cold-rolled accounting for 13pc.

Ahmsa's average steel sales price rose to $745/t from $649/t. Scrap, coke and pellet feed costs also rose, keeping gross margins in the steel segment largely unchanged at 16pc.

The company expects the production phase for the new vacuum degassing system at one of its Monclova mills in northern Mexico to begin at the end of the second quarter. The plant will allow Ahmsa to produce stronger, higher-value steel for automotive and other applications.

Shipments in the company's steam coal segment fell by 2pc to 1.44mn t as selling prices ticked up to $47/t from $44/t.

Still, higher shipments and prices in its steel segment helped Ahmsa record a consolidated profit of $1.8mn compared with a loss of $7.6mn in the prior-year period.

Ahmsa operates two mills in Monclova and produces close to 5mn t/yr of liquid steel.