Argentinian steel distributors are facing tight margins because they have been unable to pass on higher costs due to depressed demand, sources said Tuesday.
Distributors' values throughout the year have been stable compared to 2014, but costs are higher and shipments lower in 2015.
Argentina's annual inflation rate is 18%, according to the government, but industry sources cites the "real" inflation rate at 30%.
"Basically, we are losing around 30% of our money, because inflation have inched up costs accordingly, and we are not passing these costs to our products," said one distributor.
Moreover, said a second distributor, "demand is lower year on year, and the prospects are not good, which hampers potential price hikes."
A third source said "there is an expression in Spanish that says the current market is 'depressed,' just like when a person is not feeling well, but it is still healthy. That's what is happening now. Distributors are making their way through this, but with a large difficulty."
The government has reportedly requested domestic steelmakers work with stable prices even amid an inflationary period. Steelmakers did not comment on the situation.
Mills rebar prices have been unchanged in June: 8 mm, 10 mm and 12 mm rebars are currently selling at $940-$960/mt, while 6 mm rebar is currently selling at $990/mt. All prices are FOB mill.
Platts monthly assessment in June shows hot-rolled coil, 3.0-9.52 mm thick, selling at $895-$945/mt FOB mill and cold-rolled coil, 0.7-1.73 mm thick, at $980-$1,025/mt FOB mill. Prices exclude taxes.
Source: Platts
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