Posted on 10 May 2022
The Mexican steel market saw a shift in the pricing sentiment in May, data from the monthly steel sentiment survey by S&P Global Commodity Insights showed, with all participants expecting decreases in both steel and raw material costs.
In the survey of Mexican producers, distributors, traders and end-customers, conducted at the beginning of this month, the index for steel price development fell to 61.7 from 80 reported in April, indicating expectations of a significant decrease. An index of 50 indicates stability.
The downward trend was mainly driven by flat steel that slumped to an index of 57.8 in May from 75.7 in April. According to market participants, the lack of demand and signs of a downtrend in other regions started to put pressure on prices.
In the case of rebar, the index dropped to 71.4 from 81.7 the previous month. However, the tight supply in the domestic market coupled with higher offers from mills continued giving support to prices, participants said.
"Rebar prices will continue climbing despite the recent pause," said a respondent source pointing to logistics, energy costs and scrap costs as other fundamentals supporting prices.
However, another respondent source said that scrap costs are expected to remain stable or move down in May. "I don´t think there is room for more increases," the respondent said.
The index for raw materials price development also fell to 60 in May from 79.5 in April. Traders and scrap dealers were the most bearish at 36. Producer and distributor respondents recorded index levels of 60 and 66.2, respectively. End-users were the most bullish at 70.
Production-wise, participants still expected to see a slight drop, with the index averaging all groups at 61.1 from 63.8 from the previous month.
The inventory level index remained as the most bearish indicator at 55.4, showing a slight decline from the previous month which recorded 57.3, as most of the buyers expect low demand to persist.
Still, the rebar market was the most bearish at 52.9, while the flat steel market was the most bullish at 68.9 regarding steel inventory level changes.
Source:Platts
