NEW YORK A
Mexican merchant bar supplier near the California border is
changing the regional market by selling steel to end-users and
fabricators, detouring around many of the Southwests
The supplier, Aceros
Corsa Ticoman, is the distribution arm for Mexican mill Aceros
Corsa SA, which once supplied U.S. service centers in the
region and now competes with former customers. The lower-priced
imports, sold to service centers traditional customers in
partial truckloads, have compressed margins for steel merchant
bar distributors in Arizona, California and Nevada, sources
said, and eroded the older distributors long-standing
"You have a Mexican
distributor selling to the same people weve been selling
to for years and their customers and then their customers, and
its all gone," said a source at a steel service center in
California. "Ive seen our market share shrink big
Mexican merchant bar
prices have been very low in recent months, sources said, with
a large increase in supply coming on to the market with the
startup of Mexican long steel products producer Deacero SA de
CVs new mill in March, softening prices and causing
distributors like Ticoman to expand their customer base.
mill representative in the United States, Luciana Cordova,
confirmed to AMM that Corsa subsidiary Ticoman has
been selling to smaller customers. She said Ticoman was forced
to do so because it is competing in a tight Mexican market with
low-priced material and slim margins.
"Ticoman is selling to
somewhat smaller customers than the mill sells to, so I
anticipate the reaction from some of the larger distributors
(in California) being somewhat negative," she said. "Deacaro
has a new big mill and we know its going to (be a) tough
few years for all the mills. New capacity in our market has
been a problem. Everyones feeling it. Prices are very,
very low in Mexico."
Service center sources
said Ticoman has been soliciting and securing business from
their customers for several years, but it has become worse with
increasing shipments of Mexican merchant bars from other
mill in northern Mexico has an initial capacity of 550,000
tonnes per year but will eventually produce 1 million tonnes of
finished product, including merchant bar. The mill has been
expanding its market share in the United States
(amm.com, July 19), and several sources told
AMM that Mexican 2 x 2 x ¼-inch angles are
selling in a range of $640 to $700 per ton ($32 to $35 per
In addition to
Deacero, U.S. buyers reported buying from Grupo Simec SAB de CV
and Sigosa Steel Co.
Imports of Mexican
steel angles with the harmonized tariff schedule code
7216210000one of several types of imported
anglesincreased to 35,327 tonnes in the first six months
of this year, more than triple the 9,746 tonnes imported in
same period in 2012, according to U.S. Customs data.
Low pricing and
increased volumes pushed Ticoman to search out new customers,
sources said, selling daily in small bundles.
"Our biggest customers
are now final users and not large service centers," Cordova
A source at a second
service center in southern California that once bought merchant
bar from Aceros Corsa said Ticoman was targeting his customers.
"This is happening on a daily basis. They sell below Nucor
(Corp.) list prices ... 2 x 2 x ¼-inch angles are around
$37.65 per cwt plus freight and surcharge; around 41 cents per
pound delivered. Right now, Ticoman is offering 38 cents
delivered to your door. If we were talking about a fair
business, we should be selling this material at between 46 and
50 cents per pound. We used to sell at that price," he said.
"Right now I need to buy import material so I can compete
"They go to a lower
level than anyone has gone at this point," a third service
center source said. "They really are selling one, two or three
bundles at a time with two- to three-day delivery and
undercutting the larger distributors that are trying to keep up
Ticomans prices are as "high as they can (be). We
dont have a lot of margin so we try to maximize through
price. It does make me upset that other people are saying this.
We are a responsible player and we always have been."
Cordova said Ticoman
is currently selling merchant bar at higher prices than the
Mexican mills selling directly into the United States, which
the second service center source confirmed.
Gerdau SA has a
49-percent joint-venture stake in Aceros Corsa, Ticomans
"Gerdau seeks to have
relationships of mutual respect with all its stakeholders and,
therefore, as a policy the company does not compete for
customers of its customers, either directly or through its
distributors in all countries where it operates," a Gerdau
spokeswoman told AMM. "Regarding Aceros Ticoman,
Gerdau reiterates that this company exports small volumes
throughout Latin America, the Caribbean and the United States,
which has its own traditional customers."