Prices for Mexican domestic cold rolled coil (CRC) have declined in the last two weeks by about US$4/mt, moving down to the level of US$784/mt ex-mill. Nevertheless, sources still expect demand from the auto industry to have an overall effect of lifting prices over the long-term, despite minor drops here and there.
Mexican specialized flat steel producers expect that by 2018, apparent domestic demand for CRC will increase between 4.4 and 4.8 million tons, which would represent growth of 4.9 and 6.2 percent, respectively. The most optimistic forecasts for the end of this year put growth at 11 percent (reflecting an increase of 3.5 million tons.
Further, sources in the automotive industry expect that volume of automotive production will reach 5 million units in the next five years due to new investments and announced plants that are under construction. For example, official sources of the state of Queretaro, in the central region of Mexico, confirmed this week that they are about to close seven investment projects which together account for almost US$100 million.
Automotive industry production grew 5 percent in the first quarter of 2013, while exports had a contraction of 2.3 percent due to a sharp 38.5 percent drop in sales to Latin America (mainly Brazil) and lower sales in Argentina. Exports to the US market remained at a growth rate of 3.9 percent, but saw an important increase in sales of 167.2 percent during the aforementioned period, according to sources of the Mexican Association of the Automotive Industry (AMIA).