The Mexican auto industry is slowly regaining pace, the second quarter having shown more promise than the first three months of this year. During the first half of 2022, 1.66 million light vehicles were manufactured in Mexico - 3.9% more than in the same period last year but still 17% fewer than in 2019. There is some optimism that the third and fourth quarters will continue to bring improvements.
As in the USA and Europe, inflation is also a concern in Mexico where the core figure is at 7.7% - the highest in 21 years. Mexico’s central bank has had to raise rates in response not only to inflation but also to the US Federal Reserve’s interest rate hike. Mexico’s reference interest rate now stands close to 8%. High interest rates will be a further headwind for a Mexican economy which is expected to grow just 2% during 2022.
Demand for all grades of aluminium scrap continues to be limited and export prices are not offering much relief on this occasion. Low demand and prices combined with dropping steel scrap prices and high fuel costs are together creating the perfect storm for scrap recovery, with volumes at scrap yard level already suffering.