Long steel prices in Mexico’s North Region were mixed this week with rebar pricing marginally lower amid reports of reduced local demand, while wire rod prices were steady to week-ago levels following earlier price increases as local supplies remain constrained, market insiders told SteelOrbis this week.
Rebar and wire rod supply remains more limited insiders say, because ArcelorMittal’s rebar and wire rod plant at Lazaro Cardenas, Mexico, will remain offline while repairs are completed on critical plant systems damaged in August when power supply was interrupted to the key production unit.
“Rebar fell a bit to a range of MXN 13,900-14,100 this week as a result of a decline on the demand side,” remarked one SteelOrbis Mexican long steel insider. “Demand on the distribution side feels limited, and it seems not enough to sustain the recent price increases we have seen.”
While earlier reports indicated the ArcelorMittal unit would be offline for 5-6 months, on Sept. 4, according to the company’s “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, and 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.
In the local rebar markets, weekly pricing is reported at MXN 13,900-14,100 ($753-763/mt), or on average MXN 14,000 ($758/mt), down from MXN 14,200-14,300/mt, or on average MXN 14,250 ($761/mt) one week earlier.
The SteelOrbis delivered to customer wire rod price average stands at MXN 14,500/mt ($785/mt), unchanged from earlier reports a week prior when prices rose MXN 300 from prior flat pricing reported two weeks earlier at MXN 14,200/mt ($759/mt). Apparently, seller efforts to hold out for better pricing remain successful, insiders said, given continuing supply issues.
Insiders said the combination of the continuing ArcelorMittal 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 cash flow. 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.
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,” said one Mexican import insider. “Supply tightness is likely to persist into Q4.”
In the US long steel markets, rebar prices remained steady on the week at $43.50-44.50/cwt.,($870-890/nt or $959-981/mt), while wire rod prices have remain unchanged for nearly three months at $46.50-47.50/cwt.($930-950/nt or $1,025-1,047/mt).
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 tariff portion of the trade barrier could be reduced soon.
Rate $1 = MXN 18.47 (off from MXN 18.72 one week prior