Steel Mills

AHMSA Says Villacero Deal Kaput, 'Other Groups' Interested

Written by Michael Cowden

Mexican steelmaker Altos Hornos de México (AHMSA) has called off its deal with service center Grupo Villacero, according to regulatory filings in Mexico.

AHMSA said it had scrapped the agreement with Alianza Minero Metalúrgica Internacional because of alleged “legal irregularities.”

Mexican flagAlianza is a group of investors led by Grupo Villacero President Julio Villarreal, per Mexican newspaper Milenio.

AHMSA also said it had more attractive suitors. “Other groups” have expressed interest in the company “given the current favorable situation in the world steel market,” the steelmaker said.

That’s according to documents filed with Grupo BMV, the operator of the Mexican Stock Exchange, and dated Wednesday, Aug. 25.

Villacero did not immediately respond to a request for comment for this article.

The end of the agreement with Villacero will not impact production, an AHMSA spokesman said.

Separately, AHMSA said it had agreed to pay off an approximately $217 million debt owed to Petróleos Mexicanos (PEMEX). The pact is backed by company assets and an endorsement from AHMSA Chairman Alonso Ancira Elizondo, per BMV documents.

AHMSA makes hot-rolled coil, cold-rolled coil, plate, tinplate and structural shapes.

Steel Market Update does not publish Mexican plate prices. But prices in Mexico tend to track in the same direction as prices in the U.S.

U.S. hot-rolled coil prices stand at $1,915 per ton ($95.75/cwt), roughly double $985 per ton at the beginning of the year and more than quadruple $440 per in August 2020, according to SMU’s interactive price tool.

The record high prices – and the record length of the price upswing, which has endured for more than a year – has left steelmakers in their best financial shape in decades. Steel’s strong balance sheet has allowed mills to pay down debt, reinvest in their operations and make acquisitions while also offering generous dividends to shareholders.

By Michael Cowden,

Michael Cowden

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