AHMSA Steel Production Hit by Natural Gas Shortages from US
Mexico’s mining and steel companies are facing disruption and spiralling costs after Texas halted natural gas exports following historic winter storms.
Mexico’s mining and steel companies are facing disruption and spiralling costs after Texas halted natural gas exports following historic winter storms. Mexico’s biggest steelmakers based Altos Hornos de México said “The suspension in the supply of electricity and the decrease in natural gas deliveries forced Altos Hornos de México to stop production at the steel plants and in the coal and iron mines, with an accumulated decrease to date of more than 20 thousand tonnes of liquid steel. AHMSA CEO Luis Zamudio Miechielsen said “The iron plants and mines are in a shutdown protocol, without production and with the operation focused on the protection of fundamental equipment, in order to have the possibility of a rapid replacement a once the supply of energy and fuel is normalized. The company hopes that supply problems will be resolved shortly and once operations in the coal and iron mines are normalized and the supply of essential inputs is replenished, with the application of an intensive production plan, work will be done to recover lost volumes of steel production.”
AHMSA added “For the same reasons, many customers have seen their normal operations disrupted and delays have been generated in payments that AHMSA should receive, an effect that is added to the lower sale of steel products, which translates into a greater impact on the close provision of flows with which the company has been operating.”
Freezing conditions in the US state impacted supplies, leading to power outages across Mexico’s northern states and a surge in natural gas spot prices. Texas state governor Greg Abbot has ordered producers to halt natural gas exports until February 21. Mexico is heavily reliant on US exports of natural gas, from which more than 60% of its power is generated. The Mexican government has urged people to reduce electricity use, while federal power company CFE seeks to increase power generation from other sources. These include hydroelectricity, fuel oil and liquefied natural gas and coal, although some coal mining operations have been halted due to electricity shortages.
Monclova city in Coahuila state based Ahmsa has two steel plants and operates its own iron ore and metallurgical coal mines. Its crude steel production capacity is about 5.5 million tonnes per year, but it has been operating at 40% of capacity after idling blast furnace No 6 in early 2020.