After being re-elected president of the National Chamber of Iron and Steel Industry (CANACERO), Alonso Ancira Elizondo, CEO of Altos Hornos de Mexico (AHMSA), said that the steel industry and the Mexican government can no longer ignore phenomena like the "economic tsunami" that generated the crisis in Europe and slower growth in Asia, which resulted in illegal trading activities that are affecting the country's industry.
He noted that the steel industry will struggle with authorities and legislators for the modernization of trade rules so that Mexico has adequate tools to participate in the global economy. Immediate measures would include increasing the strength, flexibility and agility of the International Trade Practices Unit (UPCI) of the Ministry of Economy.
"We are participating in a new economic game with ‘Napoleonic rules' of the past and we have no defense instruments to combat a global oversupply of steel by 320 million tons, equivalent to twice the annual output of all the Americas," Elizondo said. "Some countries seek more stable economies, such as Mexico."
The lack of response to this issue and open borders have left the domestic steel industry at the mercy of unfair competition, he said, noting that imports from countries without trade agreements rose 170 percent in 2012, while domestic production decreased 2 percent and prices fell by about 30 percent, without benefit to end users.
In the specific case of the domestic steel industry, unfair competition and subsequent market instability threaten the national investment program of more than US$11 billion over the next four years, which aims to strengthen industrial chains that are important generators of employment, such as automotive, metalworking and oil.
He noted that changes boosted by President Enrique Peña Nieto and the political forces of the "Pacto por Mexico" are putting the country on the road to boost its development with a long term vision, and must be accompanied by a modernization of the legal rules governing industrial activities and the international trade between them.
Mexico's trade balance deficit for steel grew 279.5 percent in volume and 89.6 percent in value in 2012 compared to 2011. This was because while in 2011 the balance was 1.2 million tons at a cost of US$3.186 billion, in 2012 totals amounted to 4.5 million tons with a value of US$6.038 billion. According to figures from Canacero, imports recorded a significant growth, going from 7.1 to 9.6 million tons in the last year, while exports fell from 5.9 to 5.2 million tons in the same period.
Elizondo stressed the fact that the Mexican steel industry chain is the only country with virtually zero tariffs for all the world, while other areas have duties to protect their financial structures. Such is the case of footwear, textiles and clothing, with 80 percent, automotive and appliances, with 30 percent; beverages, 20 percent; tires, glass, wood and toy motorcycles, 15 percent and 10 paintings percent. Meanwhile, U.S. antidumping duties applied in the steel sector of 60 percent, the European Union 55 percent, Brazil and Argentina, between 10 and 15 percent and China, more than 15 percent.