Mexican steel service centre group Villacero will focus its investments over the next few years on value-added products rather than simply increasing its processing capacity and enhancing sales volumes.

"The planned investments will not expand volumes, but will focus on products with more value added, which offer higher margins," Roberto Márquez, deputy general director of industrial business said.

Even though the processing and distribution of steel will continue to be its main business, Villacero has been looking to diversify its product portfolio by moving into financing and logistics services, Márquez said.

"The main challenge for the steel transformation sector in Mexico is to compete against the integrated steelmakers," the executive noted.

Mexican mills have been moving downstream by adding services traditionally offered by service centres and distributors, forcing the latter to adopt new commercial strategies.

In the first quarter next year, Villacero plans to commission a $100 million logistics centre in the port of Lázaro Cárdenas, in the state of Michoacán.

Called Villacero Logistics GPS, the complex will serve the needs of third-party companies looking to import or export various types of cargoes, including steel products.

As much as 80,000 tonnes of products will be handled by the facility.

Villacero will invest another $150 million in three new units in the states of Nuevo León, Veracruz and Baja California.

In Baja California, investments will include equipment to process wire rod and manufacture products such as welded mesh.

Mexico's largest steel distributor, Villacero has capacity to process around 750,000 tpy of steel products, Márquez said.

It recently commissioned a 110,000 tpy steel pipe plant in Pesquería, Nuevo León, as well as an 840,000 tpy distribution centre in the city of Apodaca, also in Nuevo León.