Local rebar prices in Mexico’s North Region were reported slightly higher this week with wire rod pricing steady, following recent demand-inspired declines, amid new reports of higher raw material costs in the way of scrap, market insiders told SteelOrbis this week.
Market contacts said a combination of strong scrap and ongoing Section 232 steel tariffs that have prompted many local mills to sell supply that normally flows into the US into Canadian markets instead, has contributed to recent price strength, they say, even as the recent reactivation of government infrastructure projects continues to grow local demand.
“Our mix cost scrap prices from August until December (have risen) about MXN 600/ton ($544/nt or $27.22/cwt),” one mill-based Mexican long steel insider estimated to SteelOrbis. “As a result, rebar prices now range about MXN 14,200 ($772/mt). We are seeing a healthy back order, so we will be firmly pushing these price levels.”
This week’s SteelOrbis North Mexico region rebar price average is MXN 14,200/ton ($772/mt), up from earlier reports at MXN 13,900/ton ($759/mt) reported during the week of Sept. 22.
Contacts tell SteelOrbis higher scrap pricing as well as the continuing ArcelorMittal production outage could also pressure future wire rod values, though reported price levels were steady to a bit less this week.
“We’re expecting to see much of the same price pressure for wire rod at MXN 14,200 - 14,300,” he added, “as it is a less [competitive] market than rebar.”
In the Mexican wire rod segment, the SteelOrbis delivered to customer wire rod price average for the North Region stands at MXN 14,200 -14,300/ton ($772-777/mt), off slightly from an earlier reported MXN 14,200-14,350/ton ($775-783/mt), several weeks ago.
Insiders say local long steel supplies remain reduced in Mexico’s North region as a result of the continuing ArcelorMittal plant outage from August when power supply was interrupted, damaging equipment. According to the company’s recently announced “technical recovery plan,” rebar and wire rod production as well as DRI output from the plant, is now expected to be at full capacity by the end of November. Two of four of the plant’s DRI modules are currently operational, the company said. 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 during the production processes, as well as importing slabs from ArcelorMittal, Brazil, to sustain uninterrupted HRC production.
Insiders said the combination of the continuing ArcelorMittal plant outage is reducing local 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 cash flow. Recently, one Mexican market insider estimated his sales to Canada increased four-fold since US tariffs went into place between Mexico, the US and Canada in June.
In addition to current Section 232 tariffs, insiders say that Mexican supplier Deacero is “even further priced out of the US market” since anti-dumping duties on the steel producer were assessed at 32.05 percent on Sept. 4, bringing total tariffs and AD duties to more than 82 percent.
“The import gap is widening, supporting US domestic mills’ pricing power,” one Mexican import insider recently told SteelOrbis. “Supply tightness is likely to persist into Q4.”
In the US long steel markets, rebar prices remain steady this week at $44.00-45/cwt.,($880-900/nt or $970-992/mt), while wire rod prices are unchanged for more than three months at $46.50-47.50/cwt.($930-950/nt or $1,025-1,047/mt), even as supply from the recently restarted 700,000-ton Liberty wire and rod plant in Peoria, Illinois is reported “at capacity.”
On the tariff front, Mexican steel delivered to the US currently remains non-competitive with domestic producers, since Section 232 steel tariffs between the US, Mexico and Canada were doubled on June 4 to 50 percent, though some industry insiders expect the tariff portion of the trade barrier could be reduced following recent “productive” meetings which included the topic of steel tariffs between US President Trump and Canadian Prime Minister Carney in Washington.
Rate $1 = MXN 18.39, up from MXN 18.32 at last report.