Mexico Metals Report Q4 2010
Business Monitor International, October 2010, Pages: 49
The Mexico Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Mexico's metals industry.
Growth in the Mexican steel industry is faltering, due to a slowdown in demand from the US. However this latest Mexico Metals Report from BMI anticipates strong long-term growth, as manufacturing industries relocate south of the border and the government’s infrastructure drive takes effect.
In the first seven months of 2010, Mexican crude steel output grew 24.7% y-o-y to 9.66mn tonnes. However, as the downstream manufacturing sector struggles, concerns exist that the recovery is not continuing at the pace the country’s steelmakers had hoped. According to a trend reading calculated by the National Statistics Institute, weak demand in the US led to a fall in output at Mexican factories in May for the fifth time in six months.
The slowdown in the manufacturing sector is troubling, as the steel industry will need strong growth to make up for last year’s crisis. Yet there are metals-consuming manufacturing segments that continue to report strong growth, such as the automotive sector, the country’s largest manufacturing sector, which saw production rise 73% y-o-y to 1.46mn units, a figure that was also 4% up on the same period in 2008. A large part of the boost has come from the shift in automotive production capacity from the US to Mexico, with Mexican carmakers commanding an 11% share of the US market in 2010, up from 6% in 2009. BMI forecasts that Mexico will produce nearly 2.5mn vehicles by the end of 2014, on the back of a slew of investments from existing and new carmakers in Mexico.
If other manufacturing sectors can secure a similar shift in capacity south of the border, growth in domestic steel and aluminium sectors will be assured. However, BMI foresees a slowdown from expected 4.4% GDP growth in 2010 to 3.2% in 2011, due in large part to weakening investment from the US. With the recovery set to improve its pace, there will be growing optimism about the growth of domestic steel consuming industries, particularly the automotive and consumer goods sectors.
Domestically, growth in steel demand will be determined by the construction sector, which will be affected by the slowdown in gross fixed capital formation growth. However, sector growth should average 4% annually in 2010-14, which should support demand for long steel products. In a large part, this will be stimulated by the National Infrastructure Plan (NIP), which is aimed at addressing the bottlenecks in infrastructure capacity, with MXN270bn dedicated to NIP projects. This should outweigh the poor performance in the residential housing sector.
The increasing uncertainty and recent trends have prompted BMI to revise down Mexico’s crude and hotrolled output forecasts for 2010 from 18.0mn tonnes and 14.1mn tonnes respectively to 16.9mn tonnes and 13.5mn tonnes, assisted by 40% growth in exports of semi-finished and finished steel to 4.8mn tonnes, revised down from 5.2mn tonnes. Nevertheless, by mid-2011, the Mexican steel industry should be operating at or above pre-recession levels as it takes advantage of increased exports, domestic growth and expansion in domestic production capacities at the expense of US capacity, which is expected to decline.
Executive Summary
SWOT Analysis
- Mexico Political SWOT
- Mexico Economic SWOT
- Mexico Business Environment SWOT
Global Market Overview
- Table: World’s Top 10 Steel Producing Countries
- Table: Recent And New Smelter Capacity
Commodities Forecast
- Nickel
- Table: BMI’s Nickel Forecasts
- Table: Nickel, 2005-2011
- Aluminium
- Table: BMI’s Aluminium Forecasts
- Table: Aluminium, 2005-2011
- Copper
- Table: BMI’s Copper Forecasts
- Table: Copper, 2005-2011
Industry Forecast Scenario
- Table: Mexico Metals Industry (‘000 tonnes unless stated)
- Macroeconomic Forecasts
- Table: Mexico – Economic Activity
Competitive Landscape
Company Profiles
- ArcelorMittal
- Altos Hornos de México SA de CV (AHMSA)
Global Assumptions – Q4 2010 Update
- Table: Global Assumptions
- Table: Global & Regional Real Gdp Growth
- Table: Consensus Forecasts
- Table: Developed States, Real GDP Growth Forecast
- Table: Emerging Markets Aggregate Growth
Country Snapshot: Mexico Demographic Data
- Section 1: Population
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Section 2: Education And Healthcare
- Table: Education, 2002-2005
- Table: Vital Statistics, 2005-2030
- Section 3: Labour Market And Spending Power
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2012 (US$)
- Table: Average Annual Wages, 2000-2012
BMI Methodology
- How We Generate Our Industry Forecasts
- Cross Checks
- ArcelorMittal
- Altos Hornos de México SA de CV (AHMSA)
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