The dynamism in steel consumption, supported by the vigorous import of finished steel products in Mexico in the last 14 months (since March 2023), was broken by the bureaucracy of the federal government with the implementation of new rules for the import of products steelmakers since April 15, reveal the statistics of Canacero, Inegi and industry sources.
In May, the volume of imported finished steel products totaled 1.0 million metric tons (mt), representing a drop of 15.8 percent, year-over-year. It is the worst contraction in the last 18 months, according to data from the Mexican Chamber of the Iron and Steel Industry (Canacero), reviewed by SteelOrbis.
In May, 32,500 mt of steel products were imported on a daily average, that was 6,100 mt less compared to the same month last year. Compared to the previous month, April, imports were lower by 84,000 mt on a daily average.
Compared to May of last year, imports decreased by 189,000 mt and compared to last April it decreased by 220,000 mt.
In value, $2.56 billion were imported in May, 21.3 percent less, year-over-year. Compared to May of last year, $22.0 million less were imported on a daily average and compared to last April, $11.0 million less were imported per day.
The federal government's bureaucracy prevented revenue from being raised for the nation's coffers with taxes such as value added and import taxes. Furthermore, considering the services in the value chain, value added tax, income tax and economic benefit were no longer collected due to the economic dynamism of logistics: fuel consumption, lodging, restaurants and jobs (temporary and permanent).
On June 13, SteelOrbis responded to the call of several industrialists alerting them to the problem of steel shortages due to the slowness of the Ministry of Economy to approve the import permits that arose with the new rules for the steel sector, which now had to accredit certificates, quality of the steel and certificates of the mill that melted the steel (name and country), among many more requirements.
Last month, businessmen commented that some companies paralyzed their production lines due to lack of steel. The metal was stopped at Mexican customs and could not reach its owner due to the lack of authorization from the federal government.
In addition, steel consuming companies are facing million-dollar economic losses due to high storage costs at customs due to lacking government authorization to clear the material into the country.
“The change in rules came when a shipment arrived on the high seas for us. It was a small order of 500 mt. Without the permit, the merchandise was stranded in the seaport of Manzanillo and that port has very high storage costs. The import permit took a long time and it was cheaper to declare the merchandise abandoned than to continue paying for storage,” a businessman told SteelOrbis.
“The cost of government inefficiency is brutal. Never in the history of the company had merchandise been lost. The government's ineptitude, which has not yet ended, has cost us about $800,000 so far, including storage payments and merchandise being declared abandoned,” added the businessman.
According to other businessmen, the economic expense must also be considered due to the economic penalties incurred by steel transformers for failure to deliver the finished product to their customers.
According to businessmen, the economic impact continues. This means that the statistics, which are almost two months late, will have a better picture of the impact of Mexican bureaucracy in September.
In May, the imports most affected by percentage variation were those from Taiwan with an annualized decrease of 54.5 percent, from Germany 53.6 percent, from China 39.4 percent, from Japan 16.3 percent and from the United States 14.6 percent less, compared to May of last year.
In contrast, imports from South Korea increased 15.1 percent and those from Vietnam doubled.
The largest sellers of steel to Mexico, in May, are the United States with one third of the total, South Korea with a little less than one fifth of the total, in third position is Japan and in fourth place is China with less than 10 percent of the total.
In May, the most impacted finished steel products were steel bars, stainless flat steels and hot rolled coil (HRC).