Mexican long steel pricing continued higher this week as long steel supplies in Mexico’s North region are reported to be strained as a result of the continuing outage at ArcelorMittal’s Lazaro Cardenas, Mexico-based rebar and wire rod plant. The steel producer, which reported operational failures in August, was expected to be out for 5-6 months. The plant is now likely to be fully operational by the end of November, the company said.
As was previously reported by SteelOrbis on September 4, according to ArcelorMittal’s “technical recovery plan,” rebar and wire rod production as well as DRI output from its Lazaro Cardenas, Mexico-based plant shut in August, is expected to be at full capacity by the end of November. Currently two of four of the plant’s DRI modules are operational. To maintain supply during the outage, the company has introduced several strategic measures, including purchasing hot briquetted iron (HBI) from its sister plant in Texas, maximizing scrap use in production processes, as well as importing slabs from ArcelorMittal Brazil to sustain uninterrupted HRC production, the company said.
Insiders said the combination of the continuing plant outage is reducing supply at a time when US markets remain unavailable for export because of 50 percent tariffs. The tariff barrier is prompting Mexico to increase sales to Canada in order to maintain critical cashflow. One Mexican SteelOrbis market insider estimated his sales to Canada have increased four-fold since US tariffs went into place between Mexico, the US and Canada in June.
“Mittal’s absence in the market has affected wire rod supply the most, as prices are up about MXN 300/mt ($16/mt) this week,” one Mexican long steel insider said.
The SteelOrbis delivered to customer wire rod price average stands at MXN 14,500/mt ($759/mt), up from flat pricing reported two weeks earlier at MXN 14,200/mt ($775/mt). Apparently, seller efforts to hold out for better pricing were successful, given continuing supply issues.
In the local rebar markets, weekly pricing is seen MXN 50/mt ($3/mt) higher on a delivered to customer basis with prices ranging MXN 14,200-14,300/mt ($759-764/mt), or on average MXN 14,250 ($761/mt), up from on average MXN 14,200/mt two weeks earlier.
Mexican steel delivered to the US currently is not competitive with domestic producers, since Section 232 steel tariffs between the US, Mexico and Canada were doubled on June 4 to 50 percent, though many industry insiders expect the tariffs to be reduced soon.
$1 = MXN 18.72
