Mexican steel sector hoping for continuing strength

Dec 31, 2012 | 07:00 PM | Myra Pinkham

Tags  Mexico, Mexican steel, steel consumption, Al Zapanta, U.S.-Mexico Chamber of Commerce, Carlos Rodriguez-Borjas, Feralloy Corp., Phillip M. Wylie Ryerson Inc.

The Mexican steel sector, pushed by strong demand from the automotive and energy industries, has been more resilient than the U.S. steel market, continuing to see steady growth even during the second half of 2012. It hasn’t been without its headwinds, however.

Surging imports and the possibility of weaker demand in 2013--should the United States economic growth stall amid political wrangling over the debt ceiling and deficit spending--still pose risks.

“Mexico did not take as big of a hit as the United States during the (global) financial crisis and, as its downturn wasn’t as pronounced, it was able to stabilize quicker,” said Al Zapanta, president and chief executive officer of the U.S.-Mexico Chamber of Commerce. “The Mexican economy has recovered to a decent level. While it isn’t a great economy right now, it isn’t bad either. It is fair to middling.”

Mexico has seen 3.8-percent gross domestic product (GDP) growth in 2012, although that growth could cool slightly to 3.3 percent in 2013, according to the Organization for Economic Cooperation and Development, influenced by the economic situation in other countries, particularly the United States, before recovering to 3.6 percent in 2014. This is quite stronger than the U.S. GDP, which increased to an annualized 2 percent in the third quarter from 1.3 percent in the second quarter, according to an advance estimate by the U.S. Bureau of Economic Analysis.

There also is uncertainty about some Mexican policies for the next six to 12 months, with the nation in the midst of a presidential transition as Enrique Pena Nieto assumes power and replaces Felipe Calderon, Zapanta said.....