The peso has fallen since Trump’s election victory as investors worry over his threats to impose tariffs on companies that ship jobs to Mexico and his pledge to renegotiate the North American Free Trade Agreement (NAFTA).
After reaching a peak loss on September 27 to reach MNX 19.88 against the dollar, the peso began to regain strength through October, but began to lose significant ground since early November and reached MNX 20.81 on November 13 as Donald Trump’s election was announced. In early January, the peso breached the MNX 21 mark and crossed the MNX 22-peso level during trading this week but has returned to close below 22 and is presently at MNX 21.70 pesos to the dollar. The further devaluation this week resulted after Trump made strong statements about “major border taxes” and “building a wall along the border which Mexico will pay for.”
In regards HRC, prices in peso terms continued a slight decline from early November into late December 2016, but are moving up in January 2017.
HRC was approximately MXN 9,500-10,000/mt ($505-532/mt, $1= MNX 18.81, reported on October 27) FOB mill for early November. In the first few weeks of November, HRC prices decreased by 400 pesos to MXN 9,100-9,600/mt. By mid-December, prices declined to MNX 8,800-9,100/mt and continued downward to close the year at MXN 8,600-8,900/mt.
In early January, prices finally began to increase given the strong historical relationship with US trade, as the US flat mills increased prices through December and looked poised to increase again in January. Additionally, a source noted, “Dealers are moving prices up as prices for scrap in Mexico have also needed to increase in line with the increases in the global and US markets.”
According to sources close to SteelOrbis, domestic dealers for HRC are presently seeking MXN 9,500-10,000/mt ($438-461/mt) FOB mill with transactions heard in the MXN 9,100-9,400/mt ($419-433/mt) FOB mill range.
In regards CRC, prices declined through November into early December, but changed directions by mid-December. According to sources close to SteelOrbis, domestic dealers for CRC are presently seeking MXN 13,800-14,500/mt ($636-668/mt) FOB mill with transactions heard in the MXN 13,500-13,900 ($622-641/mt) FOB mill range.
$1 = MXN 21.70