Mexican domestic wire rod prices dropped US$14/mt during the three last weeks to reach the new level of US$730/mt ex-mill.
The construction sector is mostly to blame for the price downtrend. Although the Federal government of Enrique Peña Nieto announced in February its National Housing Policy, so far nobody is very clear on details of the plan. Financial sources say that the government is full of good will in words, but apparently has no strength to propel a decent path.
The housing sector in Mexico is also facing difficulty elsewhere. At the meeting on Tuesday, shares of homebuilders URBI, GEO and Homex listed on the Mexican Stock Exchange (BMV) extended their decline, now affected by weak expectations from Credit Suisse. Homex shares plunged 15 percent to 20.91 pesos, its biggest drop since October 2008; GEO titles plunged 14.20 percent to 6.83 pesos, the biggest decline since February 2012; followed by those in URBI, which fell 10.19 percent to 2.82 pesos.
As such, the Consumer Price Index (IPC) dropped 1.28 percent to 42060.61 units. Also, the Habita index, which includes housing construction, plunged 10.01 percent to 132.80 points, the biggest drop in more than a year.
Sources expect negative results for construction-related companies in the first quarter of 2013, due to a decline in volumes, weakness in revenue and EBITDA, increase in debt and negative cash flow.