Saturday, September 23, 2023

T-MEC reaches record level of FDI in iron and steel in Q1

Mexico captured foreign direct investment (FDI) inflows of $1,940 million in the basic iron and steel industry in the first quarter of 2023, representing a record compared to any quarter.

This activity led FDI inflows across the manufacturing sector, ahead of the beverage industry ($1,743 million), the manufacture of cars and trucks ($1,358 million) and the pharmaceutical industry ($967 million). According to data from the Ministry of Economy.

As part of this outcome environment, the treaty between Mexico, the United States and Canada (T-MEC) modified the former Trade Agreement’s (NAFTA) rules of origin for motor vehicles, setting minimum levels of regional value content. Increased from 62.5 to 75% and 70% of steel and aluminum requirement in vehicles comes from North America.

In 2022, US domestic steel production is estimated at 82 million metric tons; 10% of production was exported, and more than 90% was sent to Canada and Mexico.

In contrast, US steel imports totaled 28 million metric tons, of which 39% came from Canada (22%) and Mexico (17%).

Since T-MEC came into force, in July 2020, the basic iron and steel industry in Mexico attracted $5.030 million in FDI, meaning in less than three years it received the same amount as eight years ago . commencement of the validity of that commercial agreement.

Other external suppliers of steel to the United States in 2022 were South Korea (with a 9% share by volume), Brazil (8%) and Japan (4%).

On March 23, 2018, the United States imposed 25% tariffs on steel products from all countries except Canada, Mexico, Argentina, South Korea, Brazil and select countries with the European Union temporarily suspended until May 1, 2018. are.

Subsequently, full exemptions were granted to Australia and imports from Argentina, Brazil, the European Union, Japan, South Korea and the United Kingdom were subject to annual quotas.

Duty on imports of steel products from Canada and Mexico was removed on May 17, 2019.

Some projects

In Mexico, ArcelorMittal is investing approximately US$150 million to increase feed pellet production to 1 million tonnes per year, to reach 2.3 million tonnes per year, and improve the quality of the concentrate at Las Truchas.

Meanwhile, Ternium’s 2023 capex is expected to reach $1.1 billion and among its top projects is progress on building new downstream facilities at its industrial hub in Pesqueria, Mexico.

Projects there include a push-pull pickling line with an annual capacity of 550,000 tonnes and new finishing lines due to start in mid-2024, and a cold rolling mill and galvanizing line with an annual capacity of 1.6 million tonnes and 600,000 tonnes. tons, respectively, which are expected to be online by the end of 2025.

Nation World News Desk
Nation World News Desk
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