Argentina’s wire rod and rebar markets have been severely affected by the global economic crisis, which has caused longs prices to fall about 35-40 percent since the fourth quarter of last year.
Prices would have fallen even further, but for the depreciation of Argentina's local currency, which has lost considerable value in the last year.
The Argentinean peso, in 2008 Q1, was valued at around 3.05 pesos to US$1. It is currently at about 3.76 peso to US$1, and it continues depreciate against the dollar and other currencies. Economists forecast the Argentinean currency will continue depreciating until the end of the year, and foresee it going over 4 pesos to US$1.
Currently, domestic rebar prices in Argentina are at around 2,470 to 2,920 Argentine pesos/mt ($US660/mt to $780/mt) delivered to customers' yards depending on the tonnage and client. Low carbon wire rod prices are about 60 to 80 pesos (about $20/mt) less than rebar.
Demand for longs remains depressed as the country's construction industry is said to be down approximately 40 percent from normal levels. But despite the major dive it's taken since last year, the Argentine longs market is starting to witness a small recuperation in prices and demand. This is mainly due to the fact that inventories are already very low and people are starting to buy again. Market players now believe that rebar prices have bottomed out and might start firming up soon; furthermore, the government passed an economic stimulus package including public works projects that are expected to boost steel demand. Still, private construction remains considerably weaker than last year.
Argentine exports of long materials are rare as the country’s production capacity is very limited. Most of their long imports come from Brazil due to their geographic closeness and also the fact that most steel products have zero import tariffs as both countries belong to the Mercosur, a Latin American free trade agreement. Imports have been severely reduced due to the international economic crisis and now import prices are very close to domestic prices.
In Argentina, scrap prices are not very relevant as only one company uses that material, while the rest have blast furnaces and work with iron ore. Iron ore prices are significantly down from last year, but have recently started to stabilize.