MEXICO CITY, Aug 8 (Reuters) - German metals trader Kloeckner & Co is expanding in Mexico with the acquisition of a local steel supplier as it sets its sights on the country's auto industry, poised to profit from North American companies shifting production closer home.

"Mexico is really at the epicentre of re-shoring and nearshoring," John Ganem, CEO of subsidiary Kloeckner Metals Corporation told Reuters on Tuesday.

"I think the country is going to experience significant growth from a metal or steel demand perspective over the next number of years."

Kloeckner settled its acquisition of Monterrey-based National Material of Mexico (NMM) for $340 million at the end of 2022 and finalised the deal last week, beginning an integration process set to retain the Mexican firm's current managers.

Ganem said one of main attractions for Kloeckner was that NMM was an important player in Mexico's automotive market and would improve the firm's position in the North American market.

Steelmakers are predicting mounting demand as carmakers such as Tesla, which is planning a so-called gigafactory in northern Mexico, bring production away from Asia and closer to North American buyers.

Furthermore, upcoming regulations under the North American trade pact will by 2027 require at least 70% of the steel used in cars to be "melted and poured" in the region.

"Many of our large customers in the U.S. are establishing even bigger production facilities in Mexico or expanding their current production facilities," said Ganem, adding that the firm's Mexican expansion aims to supply those clients.

Ganem said he had not seen a "significant increase" in metal trading competitors in Mexico, where the company has been active for 20 years.

Kloeckner could further diversify and expand its processing capacity in the Latin American country, he added, potentially becoming involved in manufacturing and delivering finished parts.

"I think we could make many additional investments in Mexico," Ganem said, without indicating a timeline. (Reporting by Aida Pelaez-Fernandez; Editing by Stephen Coates)