Mexican ferrous scrap prices for the domestic market continued to decrease on Friday as mills' inventories remain healthy and some are expected to come back to the market in August. Slight decreases in some obsolete grades in the US in the range of $10/gt (and no improvement in prime grades) have helped Mexico's mills continue to drop prices. Nevertheless, some participants are wary that the export market to the US could siphon volumes and make it hard for mills to secure tonnages once construction activity improves after the rainy season ends in Q3.
In the meantime, the rainy season, particularly in Central Mexico, continues to affect rebar consumption and prices. Contacts report that the price of rebar has fallen by another MXN500/mt ($28.6/mt) to MXN15,000/mt ($858/mt), with expectations still bearish for the coming weeks, as rebar inventories among consumers in Mexico are reported as healthy. No significant public infrastructure projects are expected to begin, which could further stymie rebar prices. But as mentioned before, the end of the rainy season could reinvigorate the private sector's construction activity.
In Northern Mexico, the price of #1 busheling remained at MXN7,100/mt ($405/mt) delivered consumer, HMS I was unchanged at MXN5,600/mt ($320/mt) delivered, while P&S 5ft dropped by MXN300/mt ($17/mt) to MXN6,400/mt ($366/mt) delivered, shredded trended sideways at MXN7,500/mt ($429/mt) delivered. Machine shop turnings (MST) fell by MXN200/mt ($11.4/mt) to MXN4,600/mt ($263/mt) delivered.
Additionally, Mexican negotiations with the US regarding the USMCA free trade agreement and the current import tariffs on steel have not yielded any improvement in the situation for Mexican steelmakers. US President Donald Trump's administration has actually been looking to restore some of the tariffs that were blocked by the US Supreme Court, and has imposed a 10 percent tariff on products manufactured with forced labor in 60 countries. A renewed vigor in imposing tariffs, along with the US steel sector's positive run this year (SDI and Cleveland Cliffs announced improved annual results in Q2) makes it improbable that the 50pc tariffs on Mexican steel could come off.
Prices in Central Mexico diverged as well. #1 busheling prices in Central Mexico remained at MXN6,500/mt ($372/mt) delivered consumer while HMS I was unchanged at MXN5,700/mt ($326/mt) delivered. However, prices for P&S 5ft fell by MXN300/mt ($17/mt) to MXN6,100/mt ($349/mt) delivered, shredded prices contracted by MXN200/mt ($11.4/mt) to MXN7,100/mt ($406/mt) delivered, and MST prices fell by MXN300/mt ($17/mt) to MXN4,500/mt ($257/mt) delivered.
In Bajio, scrap prices were also unchanged on all grades. The price of #1 busheling was flat at MXN6,700/mt ($383/mt) delivered consumer, while HMS I prices fell by MXN100/mt ($5.7/mt) to MXN6,000/mt ($343/mt) delivered, and P&S 5ft decreased by MXN200/mt ($11.4/mt) to MXN6,200/mt ($355/mt). Shredded prices contracted by MXN100/mt ($5.7/mt) to MXN7,300/mt ($418/mt) delivered, and MST also dropped by MXN100/mt ($5.7/mt) to MXN5,200/mt ($297/mt) delivered.
$1 = MXN17.48
