Mexican domestic hot dipped galvanized (HDG) prices have continued the downtrend seen since early this month, falling US$2/mt this week to the level of US$880/mt ex-mill. Prices in the first week of March, in comparison, were closer to US$889/mt ex-mill.
Sources tell SteelOrbis that prices are likely to continue downward for at least the next quarter, based on the behavior of economic variables Mexico. Standard & Poor's Ratings Services recently revised the prospect of long-term sovereign ratings in Mexico from stable to positive, with the greatest possibility "for the government to successfully advance policies to further strengthen the fiscal situation of Mexico and its growth outlook in the medium term, which are the two main limitations of the country's sovereign ratings."
Even so, S&P also highlighted the vulnerability of the government to the volatility in oil prices and the potential fall in oil production in the medium term; approximately 35 percent of total budget revenue comes from the oil sector. The balance of these variables is expected to impact manufacturing that involves Mexican HDG.