El Bajío, which includes the Monterrey region, home to multiple steel-intensive industries, is a booming economic region in North-Central Mexico.
In the last several months, scrap prices in this region have consistently increased despite prolonged softness in the US scrap market. The sole exception occurred in early July when mills submitted synchronized bids to shave MXN 200-300/mt ($11-16/mt) off then current pricing. However, prices rebounded quickly as scrap dealers resisted. A month later a strike induced disruption in rail transit forced market premiums of MXN 300-500/mt ($16-27/mt). Market participants inform SteelOrbis that in select private deals, busheling fetched as much as MXN 5,500/mt ($301/mt) with strict quantity and delivery stipulations. Not all mills were equally affected.
Prices in the leading Mexican markets have remained stable since August 10, when SteelOrbis reported HMS I scrap at MXN 4,250-4,500/mt ($233-246/mt ), shredded scrap at MXN 4,800-5,100/mt ($263-279/mt ), P&S scrap at MXN 5,000-5,100/mt ($274-279/mt), and busheling at MXN 5,100-5,300/mt ($279-290/mt).
The exception is El Bajío, where prices are trending slightly higher due to a tight supply and high demand. For August 22, sources close to SteelOrbis report HMS I scrap at MXN 4,600-4,700/mt ($252-257/mt), shredded scrap at MXN 4,900-5,100/mt ($268-279/mt), P&S at MXN 5,100-5,300/mt ($279-290/mt), and busheling at MXN 5,300-5,400/mt ($290-296/mt).
Heading into early September, scrap dealers within the El Bajío region inform SteelOrbis of a possible 5 percent peso-denominated price decline across all grades. Contributing factors include the continued soft trend in US scrap prices, an increased flow of scrap into Mexico, reduced offers from local mills, and recent unanticipated softness in the Mexican economy as a whole. After growing by 0.8 percent in the 1st quarter of 2016, the Mexican economy shrank 0.3 percent in the 2nd quarter. In addition, industrial output fell 1.7 percent, the first contraction since early 2013.
$1 = MXN 18.27