Mexican distributors in ‘price war’: Conadiac

May 06, 2013 | 10:06 AM | Rodrigo Alonso

Tags  Mexico, Conadiac, service centers, Ahmsa, Ternium, Gerdau, Raymundo Diaz Onato, steel Rodrigo Alonso

MEXICO CITY Excess supply and low demand are the two main issues affecting the profitability of Mexican steel distributors, a key industry figure told AMM sister publication Steel First.

The market situation has generated a "strong price war" among local companies, Raymundo Díaz Oñate, president of Mexican steel distributors’ confederation Conadiac, told Steel First in an interview.

"Distributors—both members and nonmembers of Conadiac—have been fighting (each other) to win sales, so there is a strong price war, and profit margins are minimal," the executive said.

"Sometimes distributors want to earn (as low as) 200 Mexican pesos ($16.52) per tonne, and that’s absurd," he said.

Some, for example, have been trying to sell rebar for 10,200 Mexican pesos ($842.60) per tonne, which he said is already a low level in that market. "We have found some offers on the market even below 10,000 Mexican pesos ($826.28) per tonne," Díaz Oñate warned.....

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