After two weeks of stability at the price level of US$713/mt ex-mill, Mexican domestic hot rolled (HRC) prices fell US$4/mt within the last week to settle at US$709/mt ex-mill. Low production and consumption levels in Q1, which have spilled over into Q2 according to sources, are to blame for the downtrend.
According to CANACERO, HRC production fell 3.3 percent in Q1 2013 compared to Q1 2012, to reach 671,204 mt, while consumption was also down 9.9 percent, totaling 780,712 mt. Additionally, import levels fell 22.8 percent with a total of 188,690 mt in Q1, while exports grew 15.1 percent to reach 57,303 mt.
During the past three years, the Mexican economy has been driven by the revival of the export sector and manufacturing in addition to a recovery in domestic demand. External demand has been driven by the strong performance of key sectors in the US economy--such as automotive--and some structural and economic changes that contributed significantly to the development of export manufacturing.
"Currently, external demand is slowing to a limited growth outlook for our main trading partner and the prolonged recession afflicting Europe. Additionally, the strong appreciation of the exchange rate is less competitive for exports," said financial sources.
Meanwhile, Raj Nair, vice president, Global Product Development at Ford Motor Co. said in Mexico that his company expects strong demand for its vehicles in the US until 2014, despite the signs of a slowdown in the automotive sector. In Mexico, Ford produces one of its top selling cars, the Fusion, along with the Fiesta subcompact and the luxurious Lincoln MKZ.