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Mexican steel prices face bearish outlook in March with more anticipated declines

Pricing sentiment for the Mexican steel market in March took on a bearish outlook as all market participants are expecting price decreases with low inventory movement expectations, data from the monthly S&P Global Commodity Insights steel sentiment survey showed March 11. The index for price steel price development dropped again from the 38.4 reported in the previous survey to 33.3 this month. An index of 50 indicates stability.

Among the 64 respondents, which included service centers, distributors, profile sellers, producers, scrap dealers, and consumers; service centers were the ones expecting a minor decrease of prices with an index for price stability of 36.6, while distributors were expecting the higher drops in prices with an index of 32.3.

In contrast with the previous survey, the long steel market was the one under the highest pressure with an index for price stability of 31.6, while the long steel market reported an index of 35.5. Many respondents agreed that the demand remains low and, therefore, prices will continue to decline.

“It seems that the market is seeking a slight stabilization in prices after four weeks of significant declines, despite the ongoing low demand,” a trader respondent said.

“I hope that steel hits bottom by the end of March,” another respondent added.

Conversely, a distributor respondent said: “Demand has improved which may help to reduce the drop in prices.”

Similarly to the price expectations, the rest of the indices remained bearish, with an index for the change in price of raw materials of 35.1, while both the index for production and inventory change were reported at 42. Six respondents reported having 75 or more days of stock material for flat steel products, six reported 46 to 75 days, five respondents reported 16 to 30 days, and finally just two reported less than 15 days.

Inventories for long steel products were reported lower, with most respondents having less than 45 days of stock, while only two reported having 75 or more days.

Prices for busheling scrap were reported in the range of Peso 6,500-7,750/mt FOB, while HMS was reported in a range of Peso 5,350-6,600/mt EXW.

Source: S&P Global