The Mexican unit of the Italian-Argentinian Ternium and the Mexican steel company Grupo Acerero (GASA) are the two beneficiary companies of the agreement between Mexico and the United States to exclude Mexican steel exports to US which was produced using Brazilian steel from Section 232 measures, market sources commented to SteelOrbis.
Data from Grupo Acerero's controller, Grupo Fonderia, show that in 2022 the largest slab producer in Americas was Mexico with 6.0 million metric tons (mt), followed by the United States with 5.6 million mt and Brazil with 2.1 million mt. At that time, the giant Altos Hornos de México (AHMSA) was active, now it is paralyzed due to insolvency.
Although in consumption, in 2023, Mexico is the largest consumer with 8.0 million mt, followed by the United States with 6.3 million mt and Brazil only consumed 239,000 mt. This shows that Brazil has an export capacity of 1.8 million mt per year.
Industry experts comment that Ternium imports to Mexico from different countries more than 2.0 million mt of slabs from Indonesia, Vietnam and mainly from Brazil. Although occasionally they import from Japan and South Korea. In the case of GASA, it imports more than 600,000 mt of slab from Brazil.
Mexico is one of the largest suppliers of steel to the United States, alternating positions seasonally with Canada, Brazil and South Korea.
On July 10, the governments of the United States and Mexico, in a joint statement, announced measures to protect North American steel and aluminum markets. The United States imposed a 25 percent tariff on the import of steel from Mexico which is not melted or cast in the USMCA region. This is a national security measure to protect the industry from unfair imports from China.
Thus, exporting from Mexico to the United States any finished steel product such as galvanized sheet (HDG), hot rolled sheet (HRC), cold rolled sheet (CRC) or seamless tubes manufactured with steel not melted in the USMCA region must pay a 25 percent tariff.
The exception will be steel from Brazil and only for Ternium and GASA. This is due to the agreement that Mexico requested from the United States government, according to the market sources consulted.
One of the sources commented that any company, other than Ternium and GASA, that imports any finished product from Brazil must pay tariffs of between 20 and 50 percent, according to the rules issued by the Ministry of Economy since last April.
On April 22, the Ministry of Economy decreed that tariffs of between 5.0 and 50 percent be applied to 544 products imported from countries with which Mexico does not have a free trade agreement, such as Brazil. Of that total, 226 are steel products.
Exempting Mexican exports of Brazilian steel will be until the new Ternium and GASA steel mills come into operation. Although it will be in 2027 when all steel exported to the United States must be melted and cast in North America.