Steel Battle in Mexico
According to industry sources, JFE Steel, the second-largest steelmaker in Japan, is planning to set up a joint venture for automotive steel sheet manufacturing in Mexico with U.S. steelmaker Nucor. It is said that the companies will invest 30 billion yen to manufacture 400,000 tons of automotive steel sheets from 2019.
This is likely to lead to a showdown in Mexico between South Korean and Japanese steelmakers. POSCO, which set foot in the Mexican market ahead of any other South Korean and Japanese steelmakers, established a steel product processing center there in 2007 and continuous galvanizing lines (CGLs) for the production of automotive steel sheets in 2009. At present, POSCO is running two CGL facilities and five processing centers in Mexico. In addition, POSCO set up a technical service center in Mexico two years ago to work better with automakers. The technical service center’s clients include Nissan, Honda, Mazda, Volkswagen and Ford.
Hyundai Steel, in the meantime, completes the construction of its steel service center in Mexico this month. The steel service center is an automotive cold-rolled steel production base and it is expected to supply Kia Motors Mexico with cold-rolled steel sheets for use in 400,000 vehicles a year.
Nippon Steel & Sumitomo Metal, the largest steelmaker in Japan, has run CGLs with an annual capacity of 400,000 tons since 2013. It formed a joint venture in North America with ArcelorMittal, the largest company in the industry.
According to the Mexican Auto Industry Association, 80% of the vehicles manufactured in Mexico last year were exported from the country and 70% of the amount was headed to the U.S. market. A large number of global automakers, including GM, Ford, Toyota, BMW and Mercedes Benz, are running manufacturing facilities there now.