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Mexico: less material going through scrap yards

The second quarter has brought a realization that 2023 is likely to be a down year for the metals industry, and the recycling industry cannot escape this reality. 

Consumers in the extrusion industry report a drop in demand as steep as 40% in some sub-sectors such as building and construction. The rolling mill sector is also seeing a contraction in demand. This is translating not only into weak demand for extrusion and UBC scrap but also into less material going through scrap yards.

Further complicating the environment, several scrap operators have been squeezing margins in a bid to sustain volumes coming into their yards. But with several players acting in the same way and with less scrap available, the inescapable result is not only lower volumes but also thinner or non-existent margins. Domestic demand for aluminium units is also sluggish as most consumers have limited demand amid high inventories and plentiful scrap availability.

Another headache for yards is the theft of complete or partial truck and container loads either in transit or at truck line depots.  

The Mexican economy grew by 1.1% in the first quarter of 2023 compared to the final three months of last year and by 3.8% compared to the opening quarter of 2022. Growth was led by the service sector; the industrial and primary sectors which are related to the metals industry both saw decreases.

I am looking forward to meeting friends and colleagues at the BIR Convention in Amsterdam. We expect a robust attendance from Latin America and so it will be a good opportunity to get an update on developments in the region.