FEATURE: Mexican rebar market expected to be stable in 2016

The Mexican rebar market is expected to remain largely stable in 2016, as private investments in the construction sector are compensating for reduced expenditure on public works.

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Rebar sales to Mexico’s domestic market came to around 3.50 million tonnes in 2015, according to figures from local steel distributors’ association Conadiac.

This year, sales are expected to remain “very close” to 2015’s level, the association said.

“Despite recent adjustments in national public investments, the rebound in private construction has been very positive,” Conadiac told Steel First. “However, expectations for the construction sector are suffering consecutive downward revisions.”

In June, Mexico’s construction chamber, CMIC, cut its growth forecast for the sector in 2016 to 2.30% from a previous prediction of a 3% rise.

The government’s recent spending cuts were the main factor behind the reduction.

Mexico’s construction activity increased by 2.50% from January to May compared with the corresponding period in 2015, according to national statistics agency Inegi.

The country’s rebar market is mainly supplied by local producers ArcelorMittal, Ternium, Deacero, Simec, Talleres y Aceros (Tyasa) and Gerdau Corsa.

ArcelorMittal owns the Lázaro Cárdenas unit, one of the largest rebar and wire rod facilities in the country. ArcelorMittal México produced 1.5 million tonnes of crude steel in 2015.

Ternium México owns four rolling mills for long products, with annual capacity for 1.11 million tonnes of steel products.

Gerdau’s Mexican subsidiary, Gerdau Corsa, has installed capacity for 500,000 tpy of crude steel.

And Deacero has crude steel production capacity of 4.5 million tonnes, although it only produced 2.87 million tonnes in 2015.

The company announced production and job cuts last year, which it attributed to “unfair trade practices”.

Foreign trade
Last year, Mexico became more active in its use of trade defence measures, after several companies announced production and job adjustments.

In the most efficient of these measures, the government imposed a provisional duty of 15% on imports of slab, cold rolled coil, hot rolled coil, heavy plate and wire rod, but no action was taken against rebar volumes.

“Most of the national consumption [of rebar] is met by local producers, and clients rely on imports only in exceptional cases,” Conadiac said.

Mexican mills were reported to be preparing a trade case against rebar imports, but an investigation has yet to be started.

Imports may represent only a fraction of Mexico’s total rebar consumption, but inbound shipment volumes of the product are on the rise.

From January to May, Mexican rebar imports, classified under tariff code 72142001, totalled 30,542 tonnes, compared with 19,707 tonnes a year earlier, according to figures from the country’s economy secretariat.

Portugal was the largest provider of rebar to Mexico in January-May 2016, with 15,593 tonnes, followed by Spain, with 6,489 tonnes.

In the export market, Mexican rebar has been subject to anti-dumping duties in the USA since 2014, and in Chile since May this year.

From January to May, Mexico’s rebar exports amounted to 169,680 tonnes, up from 146,745 tonnes in the same five months of 2015, economy secretariat data show.

Exports to the USA amounted to 1,710 tonnes during the period, down from 1,974 tonnes a year earlier.

Shipments to Chile were 34,172 tonnes in January-May this year, up from 23,236 tonnes in the corresponding period in 2015. But rebar exports to the country were reduced to zero in May 2016.

In turn, Mexican producers have increased shipments to other South American countries.

Colombia was the largest buyer of Mexican rebar, with 83,698 tonnes from January to May this year, compared with 78,231 tonnes in the corresponding period in 2015.

Rebar exports to Peru came to 26,499 tonnes in the year-to-May, against 12,751 tonnes a year earlier.

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