The week ended November 11 SteelOrbis reported Mexican scrap prices moving up slightly in domestic terms compared to the previous October report, but losing value in dollar terms due to the drastic 10 percent devaluation post US election results. Scrap prices were reported as follows with lower prices in Monterrey and higher prices in El Bajío (Northern-Central Mexico): HMS I at MXN 3,800-4,200/mt ($185-204/mt), shredded at MXN 4,100-4,300/mt ($199-209/mt), and P&S and busheling in tandem at MXN 4,200-4,800/mt ($204-224/mt), all prices delivered to mill.
Since then, price ranges declined approximately 100 pesos for HMS I and shredded and 250 pesos for P&S and busheling. The peso devaluation has primarily been driven by the uncertainty of the future of NAFTA (North American Free Trade Agreement) as president-elect Donald Trump campaigned on its renegotiation and even possible termination.
A source close to SteelOrbis commented, “NAFTA up in the air makes it difficult to plan. Certainly a soft peso makes exports to the US more likely, but mills and service centers are being conservative as changes could come. I do not believe it will be removed but efforts will be made to renegotiate some aspects.” A separate source noted, “We hope that the lack of senate support and lobbying by business sectors affected will help minimize the possibility of changing NAFTA. In terms of scrap, Mexico will need to continue importing scrap but it is out of sync with the global market at the moment.”
Domestic scrap prices in Mexico are presently MXN 3700-4100/mt ($179-199/mt), shredded at MXN 4,000-4,200 ($194-204/mt), and P&S and busheling at MXN 3950-4,550 ($191-221/mt), all prices delivered to mill. Prices have been relatively quiet with limited fluctuations for the last 5 to 6 weeks.
SteelOrbis notes that one scrap dealer in the Northern region increased prices to collector’s early in mid-month and does not plan to decrease despite recent lull in volume demand and prices. The source stated, “Some sellers are raising prices of finished goods, US scrap imports are more expensive, and inventory at some mills is limited so we are trying to hedge our inventory for January as volume demand could increase.”
$1=MXN 20.58, 11/11/2016
$1=MXN 20.62, 11/29/2016