Mexico's Tyasa to start up 1.2m tpy steel plant in first half 2014

Mexican long steel producer Talleres y Aceros (Tyasa) plans to commission its new steel plant in Orizaba, in the state of Veracruz, next year.

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With a capacity to produce 1.2 million tpy of crude steel, the unit is expected to come into operation in the first half of 2014, cfo Gabriel Costa Aizcorbe told Steel First.

The line will boost the steelmaker’s crude steel capacity to 1.6-1.7 million-tpy from current 450,000-500,000-tpy, following a $200 million investment.

“We will carry out the first tests at the new mill between February and March next year,” Aizcorbe said.

The company intends to gradually increase the facility’s output level before operating at full capacity.

Tyasa had planned to start tests at the mill in the fourth quarter of 2013, “but we had to postpone it due to bad weather conditions”, Aizcorbe said.

The hurricanes that hit the country’s Pacific coast and the Gulf of Mexico in October had a big impact on the firm, and about 20 trucks loaded with steel products were immobilised due to floods and a broken bridge, he said.

“We were affected in several Mexican states [where we have operations],” Aizcorbe said, including the states of Guerrero, Oaxaca, Chiapas, in the Pacific coast, as well as Tabasco and Veracruz, in the Gulf of Mexico.

Tyasa expects to sell about 400,000-450,000 tonnes of steel products this year, down from 420,000 tonnes in 2012, Aizcorbe said.

The decline is due to a combination of factors, including a slowdown in Mexican construction activity and bad weather conditions.

“This year has been very difficult for the construction industry, in which we are focused,” Aizcorbe said.

The company’s sales revenues are expected to decline year-on-year in 2013, as a result, he said.

And Tyasa expects to feel the effects of a tax shake-up in Mexico, Aizcorbe added.

The Mexican senate recently approved a package of tax reforms, which included the establishment of a standard of the value-added tax (VAT) across the country to 16%. It currently is set at 11% in border states.

Tyasa has a distribution centre in the state of Chiapas, near to the border with Guatemala, designed to supply the Mexican steel market and be a source of scrap collection.

“We have not calculated the impact, [but] construction companies will have to pay higher taxes, reflecting the price of housing,” Aizcorbe said.

“[This should not] directly affect customers, but we might have a reduction in sales volumes in that area,” he added.

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