New dawn for Mexican steel puts Brazil in the shade
By David Alire Garcia and Stephen Eisenhammer
MEXICO CITY/RIO DE JANEIRO, Sept 23 (Reuters) - Mexico is emerging as the preferred choice for investors in Latin American steel making as a landmark energy reform and exposure to a U.S. recovery help outshine regional rival Brazil, where the gloom of recession has taken hold.
While steel executives in Brazil, Latin America's biggest economy, call ever more forcefully for market reforms, Mexico has pushed through a major energy overhaul and other reforms which are expected to lure billions of dollars in new investment.
Demand for steel, a building material used in everything from cars to pipelines to skyscrapers, is a bellwether for economic strength, especially in manufacturing.
Steel makers Altos Hornos de Mexico and Ternium are well placed to take advantage of better growth prospects in Mexico, while Gerdau SA is seen as the best Brazil bet, given its strong presence in the United States.
Mexico's steel chamber CANACERO forecasts 2014 steel output will grow nearly 7 percent to reach 19.4 million tonnes. Brazilian steel output, in contrast, is set to decline 2.5 percent this year, according to industry group Instituto Aco Brasil.
CANACERO estimates steel output will rise another 1.5 percent in 2015.
Industry experts in Mexico say 2014's output boost reflects the sector's recovery to pre-financial crisis levels, while major new oil projects courtesy of the reform are not expected to come online until after 2015.
Mexico's energy ministry has said historic tenders, in which private oil majors will be able to operate fields on their own for the first time in decades, won't be awarded until the second or third quarter of next year with significant steel procurement to follow. Continuación...