The rebar and wire rod markets in Mexico have continued softening in the last several weeks as internal demand remains soft and an attempt by Mexican rebar mills to raise prices was not met with customer acceptance. However, rebar seems to be the firmer of the two products, and prices are thought to be near or at the bottom.
Rather than rising like the mills were aiming for, domestic Mexican rebar market prices have actually dropped since the beginning of the month, to levels ranging from 7,300-7,700 pesos/mt (US$552-$582mt) delivered. The price hike attempted by Mexican mills about three weeks ago was rejected as demand has further weakened; nevertheless, it is thought prices have reached bottom and will proceed to increase gradually in the coming weeks as inventory levels are very low and many companies will soon have to replenish them. There are also rumors that Mexican companies have been exporting a lot of material to South American countries, thus decreasing the internal supply. Scrap prices, however, are unlikely to boost the Mexican rebar market as the slight increase seen in May will most likely be offset with the decrease that seems to will take place in June.
Domestic Mexican low carbon wire rod offers have also dropped, by about 200 pesos in recent weeks, to the current range of 7,300-7,500 pesos/mt (US$552-$567/mt) delivered. Mexican wire rod inventories are also at low levels; however, the market continues with a slightly downward trend due to the soft demand, due largely to the downturn in wire-consuming sectors like housing and automotive.
Going forward, a lot of government-funded projects are currently in the planning or starting phase, which should help to reinvigorate demand for rebar in Mexico in the coming months. According to the Mexican Statistics and Geography Institute, the National Survey of Construction Companies (which includes all companies affiliated with the Mexican Bureau of the Construction Industry as well as other non-affiliated construction companies), showed that increases were seen in transportation related projects as well as electricity and communication projects and water sanitation, in March 2009 over March 2008. The share of government-funded (as opposed to private-funded) construction projects increased to 51.5 percent in March of this year, as opposed to 39.6 percent in March of last year.