The Mexican rebar and wire rod markets have retreated further in recent weeks as prices have continued to soften.
After dropping their offering prices two weeks ago following a failed price hike attempt, longs mills and distributors in Mexico have been forced to continue lowering their prices because demand remains weak. According to sources, Mexican longs mills were planning to raise prices again last week but decided against it due to lack of orders.
Domestic Mexican rebar offers have dropped from levels seen three weeks ago 7,300-7,700 pesos/mt (US$552-$582/mt) delivered to customers’ plants, to levels ranging from 7,000-7,200 pesos/mt (US$525-$540/mt) delivered. The trend now seems to continue to be slightly down as prices have already dropped more than expected, although they are still thought to be close to hitting the bottom. With much of Mexico's rebar production currently idled, the tight supplies should help keep prices from dropping too much further.
Domestic Mexican low carbon wire rod offers have also dropped from the range reported three weeks ago of 7,300-7,500 pesos/mt (US$552-$567/mt) delivered, to the current range of 7,200-7,400 pesos/mt (US$540-$555/mt) delivered. Just like rebar, the Mexican wire rod market continues to exhibit a slightly downward price trend due to the soft demand.
On the end-use side, according to Mexico's National Institute of Statistics and Geography (INEGI), in April construction declined 11.3 percent, while the accumulated decline of the construction industry in the first four months of the year compared to the same period in 2008 adds up to 8.2 percent. Humberto Armenta González, president of the Mexican Chamber of the Construction Industry (CMIC), remarked this week during an interview with a local newspaper that although the construction sector has been one of the most affected industries in the country, due to the global financial crisis, up to now, there have not been any private construction companies declaring bankruptcy. Moreover, a report by Fitch Ratings indicates that the construction and operation of highways in Mexico continues to be a profitable business even though it has contracted 15 percent due to the economic crisis. Mexicans remain hopeful that the construction for highway and public works projects will improve soon as they have been waiting for the stimulus money for infrastructure to circulate; nevertheless, experts caution that this is an election year and as the new president will take over soon, the country might go through another period of instability.