Metal scrap sales from large collection and processing yards plunged 34.7 percent in May, year-over-year, the 12th consecutive annual decline and is also the second most severe reduction in the last 13 years, according to SteelOrbis' analysis of data from national statistics agency Inegi.
The drop in the value of scrap sales in the Mexican market began in June 2022 and has accumulated 12 months of decline.
The drop in scrap sales in May is only surpassed by the 35.1 percent drop in May 2020 (beginning of the Covid-19 pandemic). These two are the worst declines in 13 years. Considering the entire Inegi series, the worst period for this industry was in 2009 with annualized drops of 35 to 47 percent in a seven-month period.
The sale of scrap metal is of vital importance in Mexico. According to the steel company Gerdau Corsa, 93 percent of the steel produced in Mexico is made from scrap.
In the January-May period, the sale of scrap in the Mexican steel market decreased 29.6 percent. According to the indices, May and the accumulated five months, the sales levels are below those registered in 2018 (base year of the statistics).
The information from Inegi corresponds to the trade with wholesale sales of waste materials, which includes the sale of metal scrap, glass, plastic, paper and cardboard, among other reusable waste. The 34.7 percent drop in sales corresponds to total activities. Of this total, metal scrap concentrated 68.4 percent of the total sales of said industry.