This week, Mexican domestic rebar prices remained at the level of US$734mt/ex-mill, after an attempt to lift prices slightly the week prior. However, distributors are offering rebar at about US$820/mt, reflecting a steep drop from last week's level of US$867/mt. The drop is indicative of the difficulty both mills and distributors are facing in the domestic rebar market--consumption has been down since earlier in the year, and attempts at price increases have been unsuccessful. In fact, Mexican mills are reportedly trying to offload rebar to US customers for substantially less, with slightly better results.
The weak demand situation for rebar in Mexico is not expected to improve, as construction sector forecasts are not optimistic. The Mexican Chamber of Construction Industry's growth forecast fell from 3.6 percent to 3 percent this year. This decrease is attributed to the government's slow pace in announcing the guidelines and scope of the National Infrastructure Plan. Another factor contributing to the decline is that the new Housing Policy announced by the President Enrique Peña Nieto in February was interpreted as a possible "debugging" in the market, which further reduced activity levels.
Financial sources agree that the short-term outlook is for a slight decline in the construction sector; for the first quarter of 2013, construction industry activity has dropped at least 0.3 percent. Further, the builder confidence index conducted by Bimsa Reports shows that housing construction is a key sector for growth in other areas of the sector-a sentiment affirmed by 87 percent of industry players, according to Bisma.