Mexican steelmaker Altos Hornos de México (Ahmsa) has reduced its working capacity to 35pc this month because the government withdrew financial subsidies intended to improve the company’s operational performance, Davis Index has learned.
Ahmsa’s working capacity recovered to 60pc in June when demand for steel products began improving following COVID-19-related lockdowns. Although demand remains firm, the company was relying on financial assistance from the government. The company worked at 70pc capacity before the COVID-19 pandemic began.
Ahmsa is in negotiations with Villacero, a long steel producer in Mexico, for help to resolving its financial woes, an Ahmsa source said, but they refused to disclose the nature of the partnership. However, Villacero could pay $300mn towards Ahmsa’s working capital to improve its balance sheet.
Ahmsa announced on June 23 that its subsidiary, Minera del Norte, laid off 2,400 workers after the Federal Electricity Commission canceled a contract to purchase coal.
On June 9, Ahmsa initiated commercial bankruptcy proceedings for two of its subsidiaries, claiming they lacked liquidity. The two subsidiaries, which are located in the northern state of Coahuila, are Minera del Norte, which produces iron ore and coal, and Corporativo Industrial Coahuila, which produces coal.
Mexico saw a reduction in its crude steel output by 3.9pc to 1.40mn mt last month from 1.45mn mt September 2019, according to the latest figures released by the World Steel Association.