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Mexican steel industry critical over government decision to cancel 15% safeguards on product imports

Sao Paulo β€” Mexican industry associations regret the government's decision to not renew its 15% safeguard on steel imports from countries with which Mexico does not have trade agreements," sources said Wednesday.

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The safeguard measure was first imposed in October 2015, valid for six months, and was subsequently renewed since then. It was applied on imports of slab, plate, hot- and cold-rolled coil and wire rod.

Sources echoed earlier concerns that the decision could lead to Mexico being used as an interim destination for goods headed to the US.

"It is necessary to establish a [safeguard] percentage similar to that of our main trading partner (the US) in order to avoid being considered a triangulation platform for steel into that country," said members of the National Chamber of the Iron and Steel Industry, Canacero, and the workers of the mining-steel industry, in a joint statement.

"The sum of all these measures has helped to increase national production and has been implemented in line with what all other countries are doing to defend their investments and jobs," said a source at a steel producer. "The fundamental problem has not yet been solved and the signs of recovery are still incipient so we cannot slacken the pace."

According to another source, by not renewing the safeguards, the approval of the US-Mexico-Canada Agreement by the US House of Representatives is "somewhat at risk" because Mexico has demanded the elimination of the US Section 232 steel tariffs of 25%.

Canacero, in its statement, said: "The Mexican steel industry, which maintains a workforce of more than 700,000 direct and indirect jobs throughout the country, is facing a complex situation from the crisis generated by the global steel overcapacity, and aggravated by the 25% tariffs imposed unilaterally and unfairly by the US against our exports."

Ultimately, the industry fears direct impacts on domestic production and prices.

"The impact is very uncertain on how fast and how much they can go down, but the net effect could be up to a 8% fall in prices," another source said.

The Mexican Secretary of Economy declined to comment on the issue.

-- Adriana Carvalho, adriana.carvalho@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com

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