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TYASA’s production and operations CEO Oscar Chahin Sanz, finance CEO Edgar Chahin Perdomo, and commercial CEO Ely Chahin Lopez outlined the strategy behind the company’s investment in a new SBQ facility designed to produce 400,000 tonnes per year.
The project will increase TYASA’s total production capacity to 1.6 million tonnes per year and marks the company’s first large-scale push into one of the few steel segments where it previously lacked a significant presence.
While the company already produces limited volumes of SBQ through a smaller rolling mill, the investment is part of a broader strategy that has been years in the making, following earlier investments in steelmaking, casting and flat steel production.
TYASA estimates that Mexico imports around 1 million tonnes of SBQ products annually, highlighting the country’s reliance on foreign supply in the segment, with imports accounting for roughly 60-70% of domestic SBQ consumption. Now, TYASA expects the new mill to help address part of that supply gap while offering customers shorter lead times and a domestic source of supply.
The investment comes as North American manufacturers prepare for the upcoming review of the US-Mexico-Canada (USMCA) trade agreement, which is expected to shape regional trade and industrial policy in the coming years.
Despite uncertainty surrounding the negotiations, TYASA’s executives said Mexico remains a critical hub for automotive and industrial manufacturing, with supply chains that are deeply integrated across the region. That dynamic, they argued, should continue to support demand for locally produced SBQ steel.
TYASA rolled its first SBQ bar on May 25 and expects to begin commercial sales of hot-rolled rounds and flats by the end of June. Sizing mill products are expected to become available by the end of July, followed by cold-finished products in September.
The executives’ answers to Fastmarkets’ questions are below:
Ely Chahin Lopez: I think it’s a bit of both. Since we started rolling flat products, we sort of had a taste of the industrial market, but not in the way we wanted it. And this is actually not a new project. This one’s been in the making for the past eight years, since 2018. We had to stop it; we put it on pause for some political issues happening in Mexico, but this is part of the strategy TYASA has been following for years.
We already cover a significant part of the construction market with the steel we produce, and now we want to expand further into industrial applications, especially given the growth of automotive manufacturing in Mexico.
Oscar Chahin Sanz: Since 2014, when we installed our new melt shop, we already had the vision of moving into higher-end products. We entered flat products first, but the melt shop itself was designed with the intention of eventually producing the highest-quality steels, including twin ladle furnaces, a vacuum degasser and a billet caster prepared for these grades.
The biggest challenge has been changing the mindset of the organization. Since 2022, when we resumed this project, we have been preparing our teams for the transition. We installed a second magnetic stirrer on our caster, upgraded parts of the melt shop, and have been running SBQ billet trials for over a year.
When you move into SBQ production, you are no longer simply a commercial steel producer. You become a specialty producer. That shift affects everything, from sales and supply chain to steelmaking and rolling operations.
Oscar Chahin Sanz: Exactly. The process began with the melt shop in 2014, continued with flat products in 2018 and now reaches another stage in 2026 with SBQ. We feel ready for it.
Edgar Chahin Perdomo: When we decided to move forward with the project, we already had available liquid steel capacity in our melt shop and needed to determine which segment would be the focus of the next investment. We evaluated several alternatives and concluded that SBQ offered a strong opportunity.
This project was originally envisioned years ago, but we postponed it until we achieved greater maturity in flat products and value-added segments. Because we already had the steelmaking capacity in place, this investment is largely incremental and focused on adding value to existing production.
The project was initially designed for 350,000 tonnes per year. We believe it offers attractive returns because we already have experience in this segment and customer interest has been very strong.
Looking only at the incremental investment, and not considering the previous investments made in steelmaking, we expect a payback period of approximately five to six years.
The project benefits from having existing liquid steel capacity available, so the focus is simply on creating additional value from that capacity. Depending on the ramp-up and market conditions, we believe five to six years is a reasonable estimate.
Oscar Chahin Sanz: The project has since been expanded. The official figures are now a capacity of 400,000 tonnes per year and an investment of $250 million after including the second phase and additional downstream capabilities.
Another important factor is that SBQ was the only major steel segment in which TYASA did not have a significant presence. Mexico imports roughly one million tonnes per year of these products, and we believe there is a clear opportunity to replace part of those imports with domestic production.
Ely Chahin Lopez: It’s also worth noting that the $250 million only reflects the rolling mill investment. If you include all the investments made over the last eight years in the melt shop, steelmaking and continuous casting operations, the total amount would be higher.
According to figures provided by TYASA to Fastmarkets, total investment associated with the project over the past eight years amounts to $300 million.
Ely Chahin Lopez: Our strategy is to move gradually from simpler applications to more demanding ones because many industries require certifications and audits.
We are targeting three main sectors. The first is automotive. The second is oil and gas, where regional melted-and-poured steel is increasingly important. The third is industrial applications more broadly, including appliances, hardware and manufacturing.
Demand is already there, but some of these sectors require longer qualification processes before suppliers can fully participate.
Oscar Chahin Sanz: We expect to reach full capacity during the second full year of production. It is an aggressive target, but one we believe is realistic.
We had a very successful startup. During the first day of operation we were already producing high-quality grades, which gives us confidence that we will be able to qualify products quickly. We also believe the market demand exists to support that ramp-up.
Edgar Chahin Perdomo: As with any new project, there are execution risks. One of the biggest is ensuring the organization successfully transitions from a volume-oriented culture to a quality-focused culture.
From a commercial perspective, one of the main uncertainties is the future of the USMCA framework and how potential changes could affect automotive supply chains in North America.
Mexico has become deeply integrated into automotive manufacturing, and any disruption would have consequences. That said, we continue to see strong demand fundamentals.
Oscar Chahin Sanz: I would summarize the risks as primarily external. From a technological standpoint, the project uses proven equipment, and the startup has already demonstrated strong results. The larger uncertainties are geopolitical and market-related rather than operational.
Ely Chahin Lopez: It is one of the major drivers, although not the only one.
Most of the automotive industry established in Mexico ultimately serves the US market, so the trade relationship is very important. However, our goal is not primarily to export steel. We intend to sell to local manufacturers that then export finished parts and vehicles.
At the same time, domestic demand in Mexico is strong, and local supply remains limited. Most SBQ consumed in Mexico is imported, so having a reliable domestic supplier makes sense regardless of what happens with USMCA.
Oscar Chahin Sanz: Quality starts at every stage of the process, not only in the finishing lines.
The rolling mill includes Danieli’s sizing mill technology, which ensures dimensional tolerances and quality performance from the hot-rolling stage. Beyond that, we have four downstream lines, including inspection and straightening, peeling, cold-finishing and heat-treatment capabilities.
Each line includes its own quality-control systems, laboratory testing, non-destructive testing and surface inspection equipment. Together, these systems allow us to meet demanding automotive specifications across the entire product range.
The mill will be capable of producing the following sizes:Flats: 2-4 inches in width and 5/16-1 inch in thicknessRounds: 1/2-4 inches in diameter
Edgar Chahin Perdomo: We expect the segment to generate higher value than our traditional products. One important difference is that SBQ pricing is typically contract-based and often linked to formulas, which can reduce volatility.
Oscar Chahin Sanz: Higher-grade products generally command a premium because customers are paying for quality and because production requires significantly higher investments. We would expect margins to be around $20-40 per tonne higher than traditional commercial products such as rebar and wire rod.
Ely Chahin Lopez: Unlike our traditional business, which is often sold on the spot market, much of the SBQ business will be contractual. That provides better visibility and planning for production volumes.
Oscar Chahin Sanz: These contracts also typically include mechanisms that pass through fluctuations in raw-material costs, alloy prices and other inputs, helping protect margins.
Edgar Chahin Perdomo: As a result, we expect margins in this segment to be more stable than in traditional steel markets.
Ely Chahin Lopez: Mexico still has significant room for industrial development. Beyond steel itself, we believe the country can attract additional manufacturing investments that will benefit from access to high-quality steel products.
Our location is particularly strategic. We are close to the port of Veracruz and well positioned to support both domestic and export-oriented industries. We believe this investment can help stimulate broader industrial development in the region.
Oscar Chahin Sanz: We are also seeing a broader trend toward regionalization. Governments increasingly recognize the value of local manufacturing and resilient supply chains.
What the steel industry seeks is fair competition. Many imported products come from heavily subsidized producers, and we believe there is growing recognition of the importance of supporting local manufacturing ecosystems.
Edgar Chahin Perdomo: We believe North America and Latin America as a whole will benefit from the relocation of supply chains. The region has become relatively more attractive compared with other parts of the world, and this trend is likely to continue over the long term.
Ely Chahin Lopez: I would also stress that this project is not simply about replacing imports. We want to become a complete solutions provider, offering shorter lead times, strong service and high-quality products. That is the value proposition we are bringing to the market.
Oscar Chahin Sanz: Our long-term vision has always been to participate in every major steel segment in Mexico. With the addition of SBQ, TYASA becomes the only Mexican producer with a presence across all major steel markets.
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