According to sources close to SteelOrbis, expectations for HRC in Mexico's domestic market last week ranged from 11,000-11,300 pesos/mt ($561-576/mt) ex-mill. As of today, SteelOrbis has learned that HRC pricing from mills to service centers and direct clients for October deliveries is ranging at 10,500-10,800/mt pesos ($542-557/mt) and CRC at 12,600-12,800 pesos ($650-661/mt), both ex-mill.
Fundamentally, the demand for HRC in Mexico has remained strong in contrast to the US experience due to strength in domestic industries such as construction, heavy machinery, equipment, and metal structures. CRC has also retained strong demand in the automotive industry which accounts for almost 20 percent of the Mexican manufacturing sector and makes Mexico the leading auto manufacturer in Latin America.
Yet, due to supply surplus along with the influence from the US market, prices have moved down domestically. Not only are both prices generally pegged to the US based HRC price, which has faced downward correction in September, but they are experiencing a supply surplus as a result of sustained output volumes from integrated mills such as Altos Hornos de Mexico (AHMSA) and lower export demand than expected for September and October deliveries.
$1 = MXN 19.379 (9/28/2016)
$1 = MXN 19.615 (9/22/2016)