Metals trader Kloeckner bets on nearshoring boost for Mexico expansion

Kloeckner & Co SE

09/08/2023 01:27

By Aida Pelaez-Fernandez
       MEXICO CITY, Aug 8 (Reuters) - German metals trader
Kloeckner & Co  KCOGn.DE  is expanding in Mexico with the
acquisition of a local steel supplier as it sets its sights on
the country's auto industry, poised to profit from North
American companies shifting production closer home. 
    "Mexico is really at the epicentre of re-shoring and
nearshoring," John Ganem, CEO of subsidiary Kloeckner Metals
Corporation told Reuters on Tuesday. 
    "I think the country is going to experience significant
growth from a metal or steel demand perspective over the next
number of years." 
    Kloeckner settled its acquisition of Monterrey-based
National Material of Mexico (NMM) for $340 million at the end of
2022 and finalised the deal last week, beginning an integration
process set to retain the Mexican firm's current managers.
    Ganem said one of main attractions for Kloeckner was that
NMM was an important player in Mexico's automotive market and
would improve the firm's position in the North American market. 
    Steelmakers are predicting mounting demand as carmakers such
as Tesla  TSLA.O , which is planning a so-called gigafactory in
northern Mexico, bring production away from Asia and closer to
North American buyers.
    Furthermore, upcoming regulations under the North American
trade pact will by 2027 require at least 70% of the steel used
in cars to be "melted and poured" in the region.
    "Many of our large customers in the U.S. are establishing
even bigger production facilities in Mexico or expanding their
current production facilities," said Ganem, adding that the
firm's Mexican expansion aims to supply those clients.
    Ganem said he had not seen a "significant increase" in metal
trading competitors in Mexico, where the company has been active
for 20 years.
    Kloeckner could further diversify and expand its processing
capacity in the Latin American country, he added, potentially
becoming involved in manufacturing and delivering finished
parts.
    "I think we could make many additional investments in
Mexico," Ganem said, without indicating a timeline. 


 (Reporting by Aida Pelaez-Fernandez; Editing by Stephen Coates)
 ((Aida.Pelaez-Fernandez@thomsonreuters.com;))