Mexican HDG prices fell US$6/mt in the last week, to reach US$889/mt ex-mill. However, relative stability is forecasted for the next few months, with prices expected to fluctuate no more than US$5-$10/mt.
The Mexican HDG market has been experiencing overcapacity, which is only increasing with the opening of new mills in the country.
Profit margins for steel distributors have been narrowing lately, and sources believe that if distributors do not do something to address the overcapacity issue (which is compounded by a slow recovery in the industrial sector), the trend will continue.
According to economic indicators, Mexico's GDP growth this year could be lower than last year; 2012 was difficult for the sector, although the auto parts and automotive sectors outperformed other heavy steel-related end use sectors.