Participants in the Mexican domestic ferrous scrap market report that only a very limited number of mills have issued upward corrections in their prices, but that the vast majority is staying unchanged. Some even mentioned that a few mills in Mexico have intentions to apply another round of price decreases. Nevertheless, the limited increases did raise the indices for some grades.
Contacts report that prices are expected to remain stable over the next few days, and that May will bring a more definitive upward trend as scrap demand continues unabated. Yet some buyers report that they are actively trying to push down scrap prices in May. It is possible that both parties reach a middle ground, and more stability could be seen in May.
In the Northern region of the country, #1 busheling rose by MXN200/mt ($11.49/mt) to MXN7,900/mt ($454/mt) delivered, while shredded increased by the same amount and reached the exact same level. Shredded is a grade that is highly sought after in Mexico; hence, parity with prime grades is not uncommon. HMS I in Northern Mexico was unchanged from last week at MXN6,300/mt ($362/mt) delivered, while P&S 5ft was also unchanged at $7,000/mt ($402/mt) delivered.
Despite the US import tariffs on Mexican products, investments and manufacturing activity in Mexico continue to improve. According to Mexico’s National Institute of Statistics and Geography (INEGI), manufacturing production in February increased by 0.9 percent annually and 3.4 percent sequentially.
In the Bajio region, #1 busheling increased by MXN400/mt ($23/mt) to MXN8,100/mt ($465/mt) delivered. Shredded recovered what it lost last week, MXN200/mt ($11.5/mt) and settled at MXN8,100 ($465/mt) delivered. Hence, both grades also have parity in this region. HMS I improved by MXN200/mt ($11.5/mt) to MXN7,100/mt ($408/mt) delivered, also recouping what it lost last week, as it becomes apparent that these upward movements are corrections for declines that went too far. P&S 5ft MXN was unchanged at MXN7,100 ($408/mt). It should be noted that in the Bajio region, it is not uncommon to see HMS I and P&S 5ft at the same level due to local market dynamics.
For the Central region, prices are reported stable at MXN7,100/mt ($408/mt) delivered for #1 busheling, MXN6,600/mt ($379/mt) delivered for HMS I, MXN6,700 ($385/mt) delivered for P&S 5ft, and MXN5,400/mt ($310/mt) delivered for machine shop turnings (MST).
As rumors begin of a possible increase in the prices of scrap grades in the US for May (with sideways as the worst possible scenario) Mexican mills could look to not reduce their prices too much lest they lose tonnages to the export market. The price of #1 busheling in the US Midwest sits at $450/gt ($443/mt) delivered consumer, equivalent to MXN7,700/mt. If the grade were to increase to $460/gt ($453/mt) delivered, equivalent to MXN7,886/mt, it would already be at the same level as Northern Mexico’s MXN7,900/mt ($454/mt) delivered level.
