Mexican scrap prices have been sitting on the sidelines for the last three weeks as raw materials prices were moving upward globally and in the US. The move this week was slightly up in peso terms, but was eroded in US dollar terms given the recent devaluation.
US steel mills announced price hikes, but the US market was showing mixed reviews on the rate of market adoption. As Mexican prices for long and flat steel products are tied directly to US prices, Mexican mills have been unable to increase prices alongside the global movement. Additionally, Mexican market participants were uncertain of the global upward trend's strength as some domestic and international buyers were heard holding back from accepting higher offers. All of these factors kept the Mexican market at bay and domestic scrap prices relatively stable.
This week the Mexican steel market has also had to reevaluate its economic outlook as the peso devalued 10 percent in just a few days. The peso moved against the dollar from MXN 18.6 on Monday to MXN 20.50 Thursday due to the political and economic uncertainty injected by the US election of Donald Trump.
Mexican mills are beginning to rumor price increases, but firm announcements will trail the success of US price hikes. An additional consideration is that the $25/mt increase encountered by scrap in the Gulf region will make necessary scrap imports more costly and help support an increase in domestic scrap and finished steel prices.
HMS I is at MXN 3,800-4,200/mt ($185-204/mt), shredded is at MXN 4,100-4,300/mt ($199-209/mt), and P&S and busheling continue in tandem at MXN 4,200-4,800/mt ($204-224/mt), all prices delivered to mill. The higher price ranges are found in El Bajío (Northern-Central Mexico) with lower end of range in Monterrey region. Compared to the last report on October 21st, base prices for HMS I gained 200 pesos, P&S/busheling increased by 200-400 pesos while shredded moved up by 100 pesos.
$1= MXN 20.58