The prospects for the Argentinian construction sector -- and therefore rebar demand -- are dependent on a possible turnaround in the country's economic fortunes, according to steel industry sources, with upcoming elections also playing a role.
"The construction sector may gain force again once the country's economy resumes growth, then we'll see a boom," one source said.
"When Argentina's economy is stable, we'll at least see the construction sector attaining moderate growth," he said.
Another player said construction represented 2.8% of Argentinian GDP in 2016. "If the country's economy rebounds, the sector should grow in tandem," he added.
The International Monetary Fund is forecasting Argentinian GDP will grow 2.7% in 2017, and 3.2% in 2018. In 2016, it retreated 2.3%.
As a result, consumption of rebar -- the largest demand segment in the construction sector -- fell 19.4% year on year in 2016, data from the National Institute of Statistics (Indec) showed.
Sources said inflation continues to impose higher costs on the sector. Expectations are that inflation will be around 21% in 2017, compared with 40% in 2016.
Players are looking at 2017 with optimism in the face of upcoming elections for national deputies and senators on October 22, sources said.
Elections generally bring an increase in government spending on infrastructure and construction in general. "However, we didn't see much work up to date," the first source said.
Nevertheless, according to data presented in the Expo Construir last week, in Buenos Aires, more than 60% of the players in the construction field believe that investment in the sector will increase this year compared with last year.
Public works have grown moderately since the second half of 2016, players said. "We truly expect some more activity in the second half of 2017," one said.
According to a big local construction group executive, between 2013 and 2015, Argentina saw the worst levels of construction activity, while during 2016 it saw a slight recovery. "In the first months of 2017, activity in the field increased slightly," the source said.
In March, construction -- for the first time in 2017 -- saw positive year-on-year growth with a 10.8% increase, according to Indec. In the first three months of the year, the index registered a 1.8% year-on-year increase.
S&P Global Platts' monthly assessment for Argentinian domestic steel rebar was flat at $760-$770/mt delivered in May for 8 mm, 10 mm and 12 mm product, and $810/mt delivered for 6 mm product.
