Steel in Mexico Current Behavior Changes Analysis¶
Ongoing Behavior Changes¶
Based on the analysis of the provided reports on the Mexican steel industry value chain, several ongoing behavior changes are impacting relationships and demand. These changes are driven by a confluence of factors including shifts in raw material usage, evolving customer requirements, external competitive pressures, infrastructure limitations, corporate specific events, and increasing environmental considerations.
One significant behavioral shift is the increased emphasis on steel recycling and the adoption of circular economy principles, particularly driven by the dominance of the Electric Arc Furnace (EAF) route in Mexico's crude steel production (93.5% in 2022). This necessitates a more sophisticated and larger-scale approach to scrap collection and processing, as exemplified by companies like DEACERO integrating recycling into their operations. The demand for higher quality, low-copper scrap for flat product production also influences procurement behaviors, sometimes requiring imports.
Another major change originates from the near-shoring phenomenon, especially within the automotive sector. Global automotive manufacturers (OEMs) and their extensive supply chains are expanding or relocating operations to Mexico. This behavior change by end customers significantly boosts the demand for high-quality flat steel products and requires suppliers to adapt to just-in-sequence delivery and stringent quality standards (like ISO/TS 16949).
Driven by high energy costs and the need for reliable power for the energy-intensive EAF process, steel producers are showing a growing inclination towards exploring and securing more stable and cost-effective energy sources, including renewable energy through Power Purchase Agreements (PPAs). This represents a behavioral shift in energy procurement.
External factors, such as import surges and price volatility, compel domestic producers, distributors, and customers to constantly adjust their commercial and procurement behaviors. Domestic mills may seek trade defense measures, while buyers may shift sourcing based on international price benchmarks, leading to dynamic and sometimes strained commercial relationships.
Bottlenecks in logistics and infrastructure, such as rail congestion and port delays, necessitate adaptive behaviors in supply chain management among steel companies and their logistics partners to ensure timely delivery of raw materials and finished products.
The financial distress of major players like AHMSA forces changes in sourcing and supply security behaviors among their historical customers and suppliers, leading to a reallocation of commercial relationships and demand towards other market participants.
There is an observable increase in the demand for value-added services from steel service centers. Manufacturing and construction customers increasingly rely on service centers for pre-processing (like slitting and cutting) and inventory management solutions (JIT delivery), influencing the operational and service-offering behaviors of these intermediaries.
Finally, increasing pressure for environmental compliance and sustainability is starting to influence corporate behavior within the steel industry. Mills face potential penalties (like EU CBAM) which encourages investments and operational shifts towards greener technologies and reduced carbon intensity to maintain competitiveness and meet future customer and regulatory demands.
| Ongoing Behavior Change | Impact on Relationships | Impact on Demand |
|---|---|---|
| Increased emphasis on recycling | Strengthens relationships between steel mills and scrap collectors/processors; potentially reduces reliance on virgin ore suppliers. | Increases demand for processed steel scrap, particularly high-quality grades. |
| Automotive near-shoring | Fosters closer, often long-term and JIT-based relationships between Mexican steel suppliers and automotive OEMs/suppliers. | Significantly increases overall demand for high-quality flat steel products in Mexico; shifts sourcing towards domestic/regional suppliers. |
| Focus on energy efficiency and renewables | Changes relationships with traditional energy providers and fosters new relationships with renewable energy developers/providers. | Drives demand for energy-efficient equipment and potentially green energy PPAs. |
| Adjustment to import competition & price volatility | Can strain relationships between domestic producers and customers/distributors; triggers legal/political actions (e.g., anti-dumping). | Creates volatile demand for domestic steel depending on international price fluctuations. |
| Adaptation in logistics and supply chain management | Strengthens collaboration between steel companies and logistics partners; may influence investment in logistics infrastructure. | Impacts the reliability and speed of material flow, influencing customer satisfaction and potentially inventory planning downstream. |
| Changes due to corporate distress (AHMSA) | Weakens relationships with distressed entities; shifts commercial ties (customers/suppliers) to alternative players. | Reroutes demand for specific products (slabs, plates, HRC from AHMSA) towards other domestic or international sources; creates market uncertainty. |
| Growing demand for value-added services (Service Centers) | Deepens relationships between service centers and diverse manufacturing/construction customers. | Shifts some demand from direct mill purchases towards service centers for processed and JIT materials; increases demand for processing services. |
| Increased scrutiny on environmental/sustainability performance | Introduces environmental criteria into supplier-customer relationships; fosters relationships with green technology providers. | May drive future demand for lower-carbon or "green" steel products if available; influences investment demand for green technologies. |
References¶
Cámara Nacional de la Industria del Hierro y del Acero (CANACERO). “Comunicado: Reconocimiento a la Secretaría de Economía por negociaciones con EE. UU.” DEACERO. “Proceso de producción del Acero en México: Conoce su paso a paso.” Mexico News Daily. “Mexican steel confirms US $8.7 billion investment.” RC Racks. “Manufactura del acero.” Thermopanel México. “Descubre el proceso de fabricación del acero y sus fases.” Ternium México. “Industria del acero: generador de empleo en México.” Ulbrinox. “Proceso de fabricación del acero inoxidable.” Max Acero Monterrey. “Ciclo de vida del acero.” One Planet Network. “Metalmecánico: diagnóstico de la cadena de valor.” ResearchAndMarkets. “Mexico Steel Industry Research Report 2023-2032.” Ministerio de Producción, Argentina. “Informes de Cadenas de Valor – Acero.” Dialnet. Gómez-Martínez, J. (2016). “El estilo de gobernanza en la cadena de valor de la industria del acero en México.” ResearchGate. García-López, R. (2020). “Los impactos de Sostentibilidad en la Cadena de Valor de la Industria del Acero en Mexico.”