Domestic Mexican rebar prices dropped US$16/mt in the last week, falling to the level of US$712/mt ex-mill.
Weak construction activity is driving the downtrend in prices, according to sources--the construction sector contracted by 2.3 percent in Q1 and the president was forced to adjust growth estimates for 2013 from 2.8 percent to just 2 percent. Housing construction in particular is facing a variety of crises, including a glut of large tracts of land, late payments to the Institute National Housing Fund for Workers (Infonavit), and adaptation to the new vertical housing policy.
Sources noted that even though some state governments began to pay overdue bills, there are 2,000 construction companies in critical condition, many of them small and micro-level, which depend on government projects and responsibility--in many cases, if the governments do not pay, contractors or suppliers must seek loans to cover payroll.