Nucor boosts Mexico footprint with downstream buy

US steelmaker Nucor boosted its growing downstream presence in Mexico with the acquisition of precision castings company Corporacion POK.

POK produces complex castings and precision machined products used by the oil and gas, mining and sugar processing industries. The company casts its products using steel, bronze, iron and specialty exotic alloys at its Guadalajara, Jalisco, facility in western Mexico.

"This acquisition supports Nucor's strategy in Mexico, which is focused on downstream processing for high-quality, value-added applications targeting niche markets," Nucor chief executive John Ferriola said.

Nucor did not disclose the purchase price for POK, which was founded in 1894 and employs 425 people.

The deal complements Nucor's acquisition last year of a cold finish facility in Monterrey, Nuevo León, and provides the US' largest steel producer with another downstream production plant to serve the Mexican market.

Nucor operates several sheet steel processing facilities in the country as part of its Steel Technologies joint venture with Mitsui, in addition to a steel sales office.

The company is also building a galvanizing line in partnership with Japanese steelmaker JFE Steel to serve Mexico's automotive market. The $270mn facility is scheduled to open in the second half of 2019 and will produce 400,000 st/yr of steel strips.

Indiana-based steelmaker Steel Dynamics also this week announced that it will construct a 3mn st/yr flat-rolled mill in the southwestern US in part to serve the Mexican automotive industry.

The announcements come in the same week that the US, Canada and Mexico are expected to sign the renegotiated North American Free Trade Agreement, dubbed the US-Mexico-Canada Agreement, on the sidelines of the G20 Summit in Buenos Aires.

A key provision of the trilateral trade pact, which must still be ratified by legislators in the US and Mexico before taking effect, requires that at least 75pc of the value of an automobile's content be produced in north America to avoid tariffs, up from 62.5pc under Nafta.