Mexico is forecast to experience stronger steel production growth in 2017-2020 compared to Canada and US primarily due to lower operating costs. While Mexico's industrial production decreased by 0.80 percent year-on-year in August, according to the latest figures published, Mexico's vehicle production hit a record high in September at 285,344 units and 2.4 percent growth compared to the same month last year. Additionally, the steel industry is expected to continue to grow in Mexico as more automobile and related production facilities are in the pipeline.
Through the last 6 weeks, scrap prices in Mexico adjusted downward sharply to align with international and US scrap prices. A correction was necessary due to the drastic domestic price reductions mills faced in finished goods, as they adjusted to keep pace with downward moves in the US market, and the substantial spread between domestic and international scrap prices at the time. Mexico, though, is not facing the same sluggish economy as the US, has established a 15 percent interim tariff on flats and wire rod imports, and is facing a bright future in the steel industry, hence, demand for scrap pushed some prices up. Additionally, Mexico received further support as international prices of finished goods and scrap have shown upward moves this week.
HMS I is at MXN 3,600-4,000/mt ($194-216/mt), shredded is at MXN 4,000-4,200/mt ($216-227/mt), and P&S and busheling continue in tandem at MXN 4,000-4,400/mt ($216-237/mt), all prices delivered to mill. The higher price ranges are found in El Bajío (Northern-Central Mexico) while the lower ranges are in the Monterrey and Mexico City areas. Compared to the October 13th report, base prices for HMS I and scredded scrap gained MXN 100/mt, while P&S and busheling dropped MXN 100/mt. According to a source close to SteelOrbis, "HMS I and shredded encountered slight gains during negotiations while busheling and P&S lost some ground as mills benefited from imported supplies since US prices were very attractive."
$1= MXN 18.53