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Mexico

Volatility has remained the constant for our trade and has not been limited to markets, as it is also persisting on the shipping and geopolitical fronts. Shipping overseas is ever more challenging: at best, some routes are seeing an increase in rates while, at worst, certain routes are becoming unavailable. Such shipping conditions also reshape trade routes and market balances, increasing the amounts of US Twitch and Zorba finding their way into Mexico and thus further depressing demand for old cast units.

Vehicle manufacturers still face a mountain of uncertainty, complicating the demand picture for scrap destined for the production of secondary aluminium. Demand for aluminium scrap units that can be utilized to produce extrusion or rolling alloys - namely the 6000, 3000 and 1000 series - has remained robust owing to concerns over availability and primary aluminium premiums as a result of the sanctions on Russian raw materials, trade, transportation and financing. The sanctions have also caused market volatility that has challenged everyone along the supply chain. Financing costs, margin calls and well-founded questions regarding the integrity of the LME have also pushed more dealers and traders to let go of scrap units at more convenient spreads.

The Mexican economy continues to underperform, having grown just 1% during last year’s fourth quarter. Mexico is just one of two G20 countries that has not managed to return to its pre-pandemic GDP levels.