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Little impact from US gov’t shutdown on Mexican steel

Keywords: Tags  steel, Mexican steel, U.S. government shutdown, ArcelorMittal Mexico, Arturo Marroquín, Acero Prime, Industrias CH, Kansas City Southern de Mexico Grupo Villacero

MEXICO CITY — Mexico’s steel industry didn’t suffer any negative impact from the recent U.S. government shutdown, according to executives from steel companies based in the Latin American country.

However, the episode might have had a negative impact on market sentiment, the executives added.

The shutdown, which happened after U.S. lawmakers failed to come to terms on a budget deal, didn’t last long enough to force Mexican steelmakers to take any particular measures, most market participants surveyed by AMM sister publication Steel First said.

But beyond the impact on the Mexican steel industry, “we are concerned about consumer sentiment ... they could stop their purchases due to the uncertainty that this issue generates in the U.S. economy and the rest of the world,” Arturo Marroquín, general manager at Mexican service center Acero Prime S de RL de CV, said.

Had the shutdown lasted longer, a lot of service centers might have had to take measures to avoid damages, he added.

“Some service centers would have had to check their inventory levels to offset the impact on border-crossing times,” Marroquín said.

Mexico’s biggest integrated steelmaker, Altos Hornos de Mexico SA de CV (Ahmsa), didn’t notice any negative effects from the shutdown, company spokesman Francisco Orduña said. “We do not sell to the U.S. government. We have not felt any impact so far.”

Kansas City Southern de Mexico SA de CV, which carries about 40 percent of the country’s rail cargo, also didn’t experience any negative effects.

“We have not felt the impact from the government shutdown, although we have seen the risk of a financial crisis in Mexico,” according to a sales executive at the company.

Some Mexican economists have predicted that the impact of the U.S. budget and deficit on the steel industry will only be felt next year.

Mexican steel producer’s ArcelorMittal Mexico SA de CV and Industrias CH SAB de CV, as well as steel service center Grupo Villacero SA de CV, didn’t respond to requests for comment on the issue.

The United States is Mexico’s top trading partner and is the destination of about 77.5 percent of Mexican exports, according to figures from the U.S. Embassy in Mexico.

“Total U.S. goods trade with Mexico equalled $493 billion in 2012, 7 percent more than in 2011,” the embassy said.

Mexico exports more goods and services to the United States in just over a month than it does in one year to the 27 countries of the European Union, the embassy added.

A version of this article was first published in AMM sister publication Steel First.

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