Mexican steel market expects further price increases in April: survey

Sentiment across the Mexican steel market remains bullish for April, with further price increases in finished steel and raw materials expected by the entire supply chain, the S&P Global Commodity Insights' monthly survey of Mexican steel sentiment showed April 10.

In the survey of Mexican producers, distributors, service centers, profile sellers and consumers conducted at the beginning of this month, the index for steel price development was at 72.3, indicating expectations of an increase (an index of 50 indicates stability).

The increase was driven by both long and flat products, as well as their derivatives, despite some respondents saying they expect flat or declining rebar prices due to the low demand in April, a short month because of the Easter holidays.

The profile sector was the most bullish, with the price development index among that group at 76, followed by producers and distributors with an index of 74.3 and 73.3, respectively. Service centers and consumers were more bearish at 66.7.

"Demand from the flat steel market is low, but as long as supply remains limited, prices will continue high," a distributor respondent said, emphasizing that the increases are less and less strong. For rebar, there is more of a threat of a downward trend, he added.

Participants expected raw material prices to see an uptick as well, with the index averaging 64.6.

Profile sellers and mills were the most bullish reaching an index around 70 while distributors while service centers posted an index around 60.

According to respondents, prices of busheling scrap were reported in a range of Peso 7,500-8,000/mt FOB in Mexico's Northeast and Northwest, while some reports indicated higher prices up to Peso 9,400/mt FOB in the Central region in early April.

The index for steel production at 60 suggested a slight increase where the most bullish was the service center sector posting an index of 73.3 and the most bearish the distributors sector posting an index of 56.2.

Expected changes to inventory levels were mostly muted with the index including all groups at 58.1. Notably, profile sellers were the most bullish at 72 while service centers the most bearish at 50.

At the beginning of April, the level of rebar inventories in the distribution network was reported between 30 and 60 days, while sellers reported inventory levels between 15 and 30 days.

Regarding flat steel, inventory levels were mixed between service centers and distributors; however, most of them reported levels between 30 and 70 days. Mills reported less than 15 days of stock.