The automotive industry continues to struggle and also therefore demand for scrap destined for the production of secondary aluminium. It is projected that Mexico will build close to 1.75 million light vehicles this year; every year from 2014 to 2019 inclusive, the total was over 3 million.
The contribution of the automotive sector to Mexican GDP is estimated at 4% and so its ongoing challenges are a major headwind for an economy that contracted 0.4% during the third quarter of 2021. The annual inflation reading for the month of November was 7%; this highest figure in over 20 years was driven by elevated fuel and food prices.
With low demand, most consumers of aluminium scrap are beginning their winter shutdowns earlier than usual and thus most relevant buyers are staying out of the spot market. Demand from export buyers is providing much-needed consistency to the market but access to sea van containers for exports, space on vessels and on-time sailings is proving to be scarce. Thus, low domestic demand and challenging exports have combined to complicate cash-flow for most yards.
Demand for extrusion scrap continues to be robust while demand for UBC scrap is also healthy along with scrap destined for rolling mills.
The Mexican peso slid 8% during November from MX$ 20.34 to MX$ 21.99 to the US dollar; at the time of writing, it stands at MX$ 21.18.