Simec to build US$600mn special steel plant in Mexico

Grupo Simec will invest US$600mn in a new plant producing special bar quality (SBQ) steel in Mexico.

The plant, in the city of Apizaco in Tlaxcala state, will have capacity of 600,000t/y special steel, ranging from large diameter round bars to wire rod, and will be built by Italy's Danieli, Simec said in a statement on the Mexican stock exchange website.

The facility will be located close to Simec's existing 400,000t/y SBQ plant, which makes products primarily for the automotive, energy and capital goods sectors.

The plant is expected to begin operations in late 2017 and will be funded solely by cash flow from Simec and parent company Industrias CH.

PLANT DETAILS

The mill's capabilities will include scrap processing, steel casting, secondary refining, hot-rolling, long product heat treatment, cold-finished bar inspection and an advanced rod line.

The plant will also include an electricity substation, water treatment plant, compressed air facility, workshops and laboratories.

POSITIVE SIGN

The investment is a positive sign for Mexico's steel sector, which is under pressure from weak prices linked to surplus capacity in China and from low-cost Chinese imports.

Steel averaged US$216.59/t in October, down from US$457.17/t in the same month last year.

ArcelorMittal plans to cut Mexican slab production by 90%, local press reported during the week. Simec announced a US$500mn investment in a long steel plant in Brazil in March.