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Nucor partners with JFE to take on Mexico's booming automobile industry

Nucor takes on Mexico's booming autos

With U.S. tariffs now in place to prevent China from dumping steel at lower prices in the U.S., steel manufacturer Nucor Corporation is finally on solid ground again.

Jim Cramer spoke with Nucor's chairman and CEO John Ferriola, who confirmed that overcapacity still remains a major challenge for the industry.

"But I'll tell you, things are looking better in terms of our ability to work with our allies and with the United States government to finally get something done on overcapacity," Ferriola said.

John Ferriola, chief executive officer of Nucor Corp.
Andrew Harrer | Bloomberg | Getty Images

In March, the U.S. government implemented a 266 percent import duty on Chinese steel makers, as they were overproducing and dumping excess product on U.S. shores at depressed prices. Since that time, some of those tariffs have been raised even as high as 500 percent, which prompted the stocks of U.S. steelmakers to roar higher.

With the stock up 30 percent since the beginning of the year, Ferriola turned his attention to the auto industry in Mexico. He estimates that by 2020, 40 percent of all new vehicle launches will be in Mexico.

That is why Japan's No. 2 steel mill, JFE Holdings, has partnered with Nucor to build a $270 million automotive steel plant in Mexico that is expected to begin production in 2019.

"Our new plant will be right in the middle of all of this new automotive production being built," Ferriola explained.

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