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Mexico

The biggest headline out of Mexico is the strength of the peso compared to the US dollar; at the time of writing, the exchange rate stands at MX$ 16.73 - the dollar’s lowest level against the peso in seven years. A year ago, the rate was MX$ 20.51 to the dollar, or 18% higher than at present. This is beginning to become a concern for all exporters, including those shipping scrap.

The auto industry enjoyed a good first half to 2023, with light vehicle production reaching 1.9 million units for year-on-year growth of 13.9%. If current levels are sustained in the second half of the year, Mexico would finally surpass its pre-pandemic production levels. Unfortunately, this strong showing is not translating into robust demand for domestic scrap; most of Mexico’s major secondary smelters are making scrap imports their preferred choice.  

Published prices for A380 in North America are significantly higher than those in Europe or Asia, which is keeping an increasing share of US scrap in the region and making life harder for exporters to find competitive markets overseas.

Demand continues to be muted for aluminium scrap destined for rolling mills. Markets can be found for these grades but at significantly lower prices compared to other years. The Mexican and North American extrusion industry is experiencing a down year, but despite this a third-party RSI producer and a third-party billet producer have been actively supporting demand and pricing for this grade.

VAT price distortion is another concern in the Mexican market. Some US market participants are concerned that such price distortion might be spilling into their own country in the form of “below-market” prices for Mexican RSI entering the USA. Trade associations on both sides of the border need to address, pre-empt or dispel these concerns.