Scrap prices in Northern Mexico decline in September

Monday, 19 September 2016 22:15:14 (GMT+3)   |  
       

For the El Bajío (Northern Mexico) region, SteelOrbis reported mid-August prices as HMS I scrap at 4500-4700 pesos/mt ($248-259/mt), shredded scrap at 4900-5100 pesos/mt ($270-281/mt), P&S at 5200-5300 pesos/mt ($287-292), and busheling at 5200-5400 pesos/mt ($287-298/mt).

In early September, local scrap traders believed that the market could sustain the high prices despite frequent efforts by mill buyers to lower prices over the summer.  In the first week, mills in the Monterrey region successfully lowered prices 300-400 pesos/mt across all grades.  This push was due to lower scrap indexes resulting from the fall in US scrap prices, sufficient pig iron inventories, domestic economic concerns, planned maintenance outages, and expanded import options from declining US scrap prices.   However, the import threat may be limited given the substantial devaluation of the Mexican peso against the US dollar last week (from closing at 18.909 on September 9th to 19.615 on September 16th per dollar).   

In the other regions of El Bajío, prices began to adjust early in the second week of the month given the decline in Monterrey as well as concerns about the US automotive industry.  Many manufacturers in the region export semi-finished and finished products to the industry.  Hence, the original 300-400 pesos/mt decline encountered an additional 100-200 pesos/mt decline in the region by last Friday resulting in HMS I scrap at 4200-4300 pesos/mt ($214-219/mt), shredded scrap at 4400-4600 pesos/mt ($224-235/mt), P&S at 4700-4900 pesos/mt ($240-250/mt), and busheling at 4700-4900 pesos/mt ($240-250/mt).

A scrap trader in Guadalajara noted that his company has already adjusted pricing to collectors down 8-10 percent to partially negate the previous increase to collectors in August.  He said, “We know that the mills are thinking about trying to decrease pricing by probably 100-200 pesos again.  That is expected, that is what the mill buyer is supposed to do, but I am not sure about the supply we will have at the time to accept the lower prices.”

1 USD = 18.139 MXP, 8/17/2016; 1USD = 19.615 MXP, 09/16/2016


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