The scrap market in Mexico continues to enjoy strong prices, though; buying activity was quiet this week pending results from the US scrap market buy-cycle in September. The US market at the moment is forecast to trend generally sideways on most grades and down on busheling.
In contrast, all grades including busheling are expected to remain strong and even threaten to tighten the upper range next week in the Northern region of Mexico. Mills continue with weekly efforts to pull prices down but have been unsuccessful. Inventories remain low, demand remains high, and limited increases in imports are foreseen. The US scrap firms are facing tight supply domestically, thereby, limiting availability for export quantities. Additionally, importing firms are reporting regulatory and transportation challenges that make it costly for US scrap firms near the border to supply the heated Mexican market in a timely manner.
Market sources close to SteelOrbis, reported a price increase by some scrap yards to collectors by 10 percent in August, compared to July pricing, in an effort to increase inventories. A scrap contact close to SteelOrbis in Guadalajara stated, “I know that mills want a lower price, but I do not think that it is possible when supply is so tight, and I also have to pay more to the scrap collectors.”
“I have companies from Guadalajara making me very good offers for my auto scrap,” stated an independent scrap firm in Mexicali, who historically has been a source for the large buying firms based in his own Baja California region.
“Initially, I thought US outlook would push prices lower, but it is a situation of local supply to run the mills and I hear products are selling well,” commented a scrap firm contact in Monterrey.
For the El Bajío (Northern Mexico) region, SteelOrbis most recently reported HMS I scrap at 4500-4700 pesos/mt ($248-259/mt), shredded scrap at 4900-5100 pesos/mt ($270-281/mt), P&S at 5200-5300 pesos/mt ($287-292), and busheling at 5200-5400 pesos/mt ($287-298/mt).
1 USD = 18.139 MXP, 8/17/2016