Steel Mills

ArcelorMittal Mexico’s production loss mounts as strike continues

Written by Laura Miller

ArcelorMittal Mexico is suffering a significant production loss as the labor strike at its mill in Lazaro Cardenas is now in its fourth week.

The strike began on May 24 when members of the local mining union began protesting the profit-sharing payments they received from the company. The protest is blocking the entrances to both the mill and the company’s mine.

On June 5, the steelmaker issued a statement about the illegal blockade, noting a production loss of 100,000 metric tons (mt). On Monday this week, ArcelorMittal told Reuters the loss of output is now estimated at 300,000 mt.

Recall that the Lazaro Cardenas mill in the state of Michoacán has a production capacity of 5.3 million metric tons, producing slab, hot-rolled coil, and long products. It operates one blast furnace (for longs) and four electric-arc furnaces (for flats). Its 2.5-million-mt-per-year hot-strip mill began operations in 2021.

The company’s Las Truchas mining operation is undergoing a $150-million expansion to more than double its production of pellet feed. Completion is planned for later this year.

The steelmaker has not returned SMU’s requests for comment, nor has it issued a public statement since June 5.

Calls for reconciliation

Mexico’s national steel chamber, Canacero, issued a second statement on Monday regarding the ongoing situation, voicing concerns about the economic impacts the mill’s shutdown is having on the region.

The association, based in Monterrey, Nuevo Leon, noted the effects could be felt along the steel supply chain in Mexico and the US.

It again called on the union and the government to “find a prompt solution to the conflict.”

Noventa Grados reported that the Governor of Michoacan, Alfredo Ramírez Bedolla, said in a press conference meetings are taking place between representatives of the government, the union, and the steelmaker.

Bedolla and Mexico’s Secretary of Labor and Social Security, Marath Baruch Bolaños López, have personally met with ArcelorMittal and union leaders to try to resolve the conflict.

Noting that the steel industry is global in nature and “the price of steel is an international price,” he said they are doing everything they can to reopen the mill as soon as possible.

Outage’s potential impact

While the strike’s impact on the steel market has not yet been felt, that could soon change.

SMU is told that ArcelorMittal accounts for more than 15% of the HR coil market in Mexico.

Several sources have suggested that the unexpected mill outage could soon create a shortage of HR coil in the Mexican market and drive up prices. SMU is monitoring the situation.

Laura Miller

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