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Nearshoring Will Boost Steel Consumption
Mexico has a favorable outlook for the steel industry, since with the relocation of companies due to the nearshoring trend, as well as the return of production and manufacturing of goods, called reshoring, the consumption of this metal will grow above the estimated average for all of Latin America.
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Alejandro Wagner, executive director of the Latin American Steel Association (Alacero), told Forbes Mexico that demand is expected to grow 2.5% in 2023 and 2.6% in 2024, making it the country that will benefit the most from this regionalization.
The forecast for Latin America is that in 2023 it will grow an average of 1.8% and in 2024, 2.5%, so Mexico would have a better performance in steel consumption, driven by foreign direct investment that will arrive in the next 24 months due to nearshoring and reshoring.
Mexico will not only grow more than Latin America this year in steel demand, but also more than the world, as the global increase is expected to be 1.7%.
“With the current conditions that comprise our region (Latin America), we have a Brazil with a very low or almost zero growth for this year, an estimate that will not exceed 1%, but with a Mexico that definitely drives more steel growth by possibly increasing nearshoring foreign direct investments (...) In Mexico what will drive steel demand in the next 12 to 24 months, unlike other years, is more manufacturing than construction,” Wagner explained.
For the executive director of Alacero, new investments, for example, the case of the installation of the Tesla plant in Monterrey, which is not the only one, will have a positive impact on the steel industry.
“These investments are obviously very much driven by the North American market and by the post-covid trend that already existed before, but that began to accelerate after the pandemic, with many companies and countries understanding that globalization made the cost of production the main decision driver and as a consequence locating companies or manufacturing outside the region looking for cost savings, but the pandemic put this in doubt, understanding that the lowest cost is not always the best option”, he said.
