Ternium to Supply Slabs to Calvert, Despite Section 232

When asked about possible tariffs on the steel coming into Calvert as a result of Section 232 measures, Novegil said shipments would be on a “delivery duty-unpaid” basis, therefore placing any additional costs on the customer.                                                

CFO Pablo Brizzio called the Department of Commerce Section 232 recommendations “harsh.” High tariffs or quotas could add heavy burdens for U.S. manufacturers and increase consumer costs, said Brizzio.

“We really don’t know where this is going. As to what effects this will have for Ternium, based on the information that we have today, we don’t anticipate a significant impact for us in the near future.” Brizzio included in that assessment exports to the United States from both its Brazilian and Mexican operations, adding that Ternium exports from Mexico to the U.S. are “quite marginal.”

Mexico steel pricing follows U.S. pricing, but U.S. pricing is likely to increase quicker in the event of Section 232 action, said Brizzio. He was confident that the Mexican government will take action to avoid collateral effects on free trade.

Steel demand is expected to grow 3.0 percent in Mexico with most growth coming from the industrial sector, said Novegil. The auto and HVAC sectors are not expected to meet 2017 demand levels.

Novegil said NAFTA negotiations are causing some short-term uncertainty that may be delaying some investments in the industry. “We believe that the trade between the U.S., Canada, and Mexico will continue with or without the negotiation of the NAFTA agreement, because it’s evident that it benefits all the parties involved.”

“I think it’s worth mentioning that the U.S. exports considerably more steel to Mexico than what Mexico exports to the U.S. So today, almost 50 percent of all the imports in Mexico come from the U.S.,” said Novegil. “To be honest, it will make no sense for the U.S. to impose tariffs on the import of Mexican steel and get appropriate retaliation from the Mexican government for the export of U.S. steel to Mexico.”