Mexico

Mexico’s non-ferrous scrap market entered February with a clearer policy backdrop but tougher day-to-day execution. Most importantly, by December 2025 it had been confirmed that the proposed 10% import tariff on P1020 primary aluminium into Mexico would not be implemented. That removed an immediate cost risk for downstream users and reduced the “policy premium” that had been creeping into offers. However, it has not made scrap trading uniformly easier because foreign exchange, tax friction and cross-border pull remain the real price-setters.

The strength of the peso is now a central variable in negotiations. The currency has traded in the mid‑17s to the US dollar in recent weeks, which can help replacement costs for imported units but simultaneously squeezes export competitiveness and tightens margins for processors and casthouses whose economics are dollar-linked.

Even where headline prices look workable, VAT treatment, documentation requirements and audit risk can widen the gap between quoted levels and executable returns. This adds working-capital friction and favours larger, more formal operators with stronger compliance and financing capacity.

In the aluminium scrap trade, conditions remain highly differentiated by grade and by destination. Export demand - particularly from the USA - continues to pull in the cleanest units, keeping premiums firm for high-yield, low-contamination material such as clean extrusions/profiles and other mill-grade streams. Traders report that deal levels are increasingly set by quality and documentation; ReMA-style spec adherence, chemistry risk and traceability are now as important as the headline price, and lots that fail sorting standards see sharply discounted bids or delayed placement.

Domestic consumers, meanwhile, have been more selective. Some casthouses are managing output and covering part of their needs through imported billet/slab where economics allow, which limits their willingness to chase scrap at elevated premiums. The result is a market that is tight for clean, prompt material but softer for solid/mixed grades where availability is better and buyers are cautious on yield and impurity. This split is also feeding greater basis volatility by region and by payment terms, as tax/compliance requirements and working-capital constraints translate into wider spreads between quoted and executable netbacks.

The auto industry remains one of the main drivers for both metal demand and scrap generation. In 2025, Mexico sold 1,524,583 light vehicles (third-best year on record), produced 3,953,494 (down 0.9% year on year but still the second-highest total ever), and exported 3,385,785 (‑2.7%). December production was 8.5% higher year on year even though the month’s exports fell 14.5% compared to December 2024.

The scrap trade in early 2026 is being shaped less by a single headline and more by execution realities, with a clear two-tier market in which there is competition for clean units whereas mixed grades clear only at a discount. If North American auto exports remain choppy, buyers are likely to stay disciplined, keeping premiums focused on the cleanest, most traceable lots and leaving the rest of the market sensitive to any shift in industrial activity, foreign exchange or policy tone.