The Mexican tubular product market has suffered particularly acutely from the global economic downturn, and with the emergence of a new burgeoning threat to the country's economy in the last few weeks, it does not appear that the market will start to improve anytime soon.
The global economic crisis has impacted Mexico's pipe and tubing market heavily, with producers citing a drop in sales of up to 60 percent. Demand had improved somewhat in the last month, and the peso has recuperated some of the value it lost last year when the global recession first started; nevertheless, the threat of swine flu, while abating somewhat in the last couple weeks as new cases seem to be tapering off, has already negatively impacted its currency and steel business.
Square tubing prices in Mexico range from 10,000 to 12,000 pesos/mt (US$760 /mt to $915 /mt). Exports take place primarily to the US, and the balance to South American countries.
Production of tubes in Mexico is more fragmented compared to production of reinforced bars, wire rod, hot and cold rolled coils, which are only produced by a handful of mills. Competition, therefore, is fiercer. Nevertheless, imports are still scarce. As demand has dropped, inventory levels have also risen and companies have been producing at lower levels to better cope with the market conditions.
Light wall square and rectangular tubing exports to the US are subject to antidumping duties, although the rates are relatively low as compared to those for standard pipe. For square tubing, antidumping duties started being charged as of August 2008 and range from 2.40 to 11.50 percent. Nevertheless, exports of both of these products to the US remain relatively low. The US DOC reported that in March the US imported 4,321 mt of structural pipe and tube from Mexico, and 4,759 mt of standard pipe from Mexico. Prices are competitive with the US tube makers. Mexican square and rectangular tubes are selling approximately at $28.00 to $29.00 cwt. delivered in Texas and California.