Posco seeks steel import relief from Mexico after failing to persuade U.S.

Posted on 21 May 2019

Source: Pulse

South Korea’s largest steelmaker Posco has turned to Mexico for import relief after it failed to persuade the United States from removing its quota cap on Korean steel.

According to the Korean steel giant on Monday, the company has requested the Mexican government to sequentially raise its import quota of automotive cold rolled steel sheets over the next five years.

Specifically, Posco said it petitioned for the import quota to be bumped up from 547,500 tons this year to 585,000 tons next year, 606,000 tons in 2021, 633,000 tons in 2022 and 677,000 tons in 2023. Another Korean steelmaker Hyundai Steel is also said to make a similar plea.

The Mexican government is expected to respond within the year.

The move comes after Washington last Friday announced it was removing its yearlong steel and aluminum tariffs on NAFTA partners Mexico and Canada, while keeping the cap unchanged on Korean steels. Korea avoided sweeping 25-percent steel tariffs from the U.S. but must keep shipments below 70 percent of average annual levels. Posco lobbied hard to gain exemptions from the U.S. quota, but failed.

In 2009, Posco opened a continuous galvanizing line (CGL) in Altamira, Tamaulipas of east Mexico. Galvanization refers to the process of applying zinc coating to the base steel to prevent rust and increase durability. Galvanized steel is widely used in exterior panels of automobiles, and the steel produced in the Altamira plant is supplied to automakers such as Volkswagen, General Motors, Chrylser and Kia Motors in Mexico as well as those in the manufacturing belt of the American South.

In 2011, Posco ramped up production in Mexico to 800,000 tons a year to meet growing demand in Latin America’s largest auto manufacturing base. The company operates other CGL lines in India and China.

Its operations hit a snag in 2013 when Mexican officials launched an anti-dumping investigation into Korean cold rolled steel plates. The government at first considered slapping Korean steel with countervailing duties of 6.45 percent but later repealed its plans and opted for company-specific import quotas. Posco was subject to a quota of 545,000 tons in 2018. 

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