May, 21, 2019 - South Korea’s steelmaker POSCO has turned to Mexico for import relief after it failed to persuade the United States from removing its quota cap on Korean steel. According to the Korean steel giant, the company has requested the Mexican government to sequentially raise its import quota of automotive cold rolled steel sheets over the next five years. Specifically, Posco said it petitioned for the import quota to be bumped up from 547,500 tonnes this year to 585,000 tonnes next year, 606,000 tonnes in 2021, 633,000 tonnes in 2022 and 677,000 tonnes in 2023. Another Korean steelmaker Hyundai Steel is also said to make a similar plea.
The Mexican government is expected to respond within the year.
The move comes after Washington announced it was removing its yearlong steel and aluminum tariffs on NAFTA partners Mexico and Canada, while keeping the cap unchanged on Korean steels. Korea avoided sweeping 25% steel tariffs from the US but must keep shipments below 70% of average annual levels. Posco lobbied hard to gain exemptions from the US quota, but failed.
In 2009, Posco opened a continuous galvanizing line in Altamira, Tamaulipas of east Mexico. Galvanization refers to the process of applying zinc coating to the base steel to prevent rust and increase durability. Galvanized steel is widely used in exterior panels of automobiles, and the steel produced in the Altamira plant is supplied to automakers such as Volkswagen, General Motors, Chrylser and Kia Motors in Mexico as well as those in the manufacturing belt of the American South.
In 2011, Posco ramped up production in Mexico to 800,000 tons a year to meet growing demand in Latin America’s large auto manufacturing base. The company operates other CGL lines in India and China.