Mexican HRC prices decline

Friday, 23 September 2016 21:47:57 (GMT+3)   |  
       

The largest producer of HRC in Mexico, namely Altos Hornos de Mexico (AHMSA), has yet to finalize the prices for October deliverables.

They customarily require for orders to be placed on the 10th of the ongoing month for next month’s fulfillment.  Pricing is also established by that time for the following month.  Yet, it is evident that AHMS is facing a difficult market situation since as of September 23rd they have yet to advertise pricing for October deliveries.  They have received planned orders but are waiting to understand the final volume requirements prior to finalizing the spot market in Mexico.  According to a large HRC buyer close to Steel Orbis, this lag in price commitment to buyers actually places more pressure on AHMSA to move prices downward beyond expectations.  As of last week, the expectation by buyers for HRC pricing was at 11,200-11,500 pesos/mt ($571-586/mt).

AHMSA’s ongoing official price list for HRC remains at 12,400-12,500 pesos/mt ($632-637/mt) ex-mill, but the reality according to several buyers close to SteelOrbis is 11,000-11,300 pesos/mt ($561-576/mt) ex-mill for October deliveries.  This expectation by domestic buyers is especially reinforced as HRC offers from Mexico to the US have been heard near $550/mt DDP loaded Truck in Gulf Mexico.  Tonnage availability by AHMSA and Ternium, the dominant HRC producers in Mexico, to the export market under such discounted conditions according to domestic market participants’ points to a supply surplus.  Additionally, Mexico mirrors activity, though with a slight lag, in the US and HRC prices in the US have also declined substantially in September.  Sources close to SteelOrbis report US HRC pricing today at $573-595/mt ex-mill. 

Due to the devaluation that the Mexican peso has endured since early last week, most buyers are staying away from the 3-6 month dollar based contracts, which are preferred during stable conditions, and moving to spot market transactions based in pesos for now. 

1 US dollar = 19.615 MXP , 9/22/2016 close


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