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Mexican rebar prices drop after three weeks of stability on easing offer levels

Friday, 13 August 2021

Mexican domestic rebar prices fell slightly on Aug. 13 as market participants consistently reported lower offers than in previous weeks.

Although, it is still unclear whether prices will keep a downtrend, or if mills were just looking to close negotiations amid the limited market activity, which continued to be lower than usual.

The Platts´ weekly assessment for domestic R42-grade rebar delivered Northeast Mexico dipped Peso 100/mt to Peso 21,500/mt. This represented the first fall since July 3, 2020, when prices bottomed out at Peso 11,900/mt, battered by the pandemic restrictions.

However, the converted price to dollar was up 0.4% to $1,080.61/mt, considering an exchange rate of Peso 19.8961/$1.

“The rebar market activity is extremely low,” said a distributor source who received offers at Peso 21,500/mt. The distributor did not report new purchases, though.

A mill source, who concurred on the dull demand, admitted being analyzing to reduce offers levels with the largest clients. He said offers at Peso 22,000/mt have resulted in clients postponing the buying decision.

Nevertheless, a third mill source noticed an increase in orders -compared to the previous week- in response to the price adjustment. The source cited deals at Peso 21,500/mt delivered both Central and Northeast regions.

“Distributors are quoting without closing big deals,” said a second mill source noting the softening in demand in August was normal. Although he said, “Concerns were higher about low demand than prices.”

The mill source said that not seeing prices at Peso 21,100/mt as in the previous month is still a positive signal.

But the persistently weak buying interest has resulted in a buildup inventory at seller´s facilities, which could lead the see rising stocks at mills´ facilities too, according to market participants.

“There´s plenty of inventories in the distribution network and now we all want to have the minimum,” said a second distributor source adding that in tandem with the lower offer levels, mills were also in a rush to deliver pending backorders. “There are already immediate deliveries for all calibers,” he added.

On the other hand, the distributor source said that mills had been also closing some deals directly with [larger] end-users with price levels as low as Peso 21,300/mt.

-- Claudia Cardenas

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