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Major market participants in the Mexican metals supply chain shared their perspectives on everything from tariffs to global trade flows. This was at Fastmarkets’ inaugural Mexico Metals Outlook 2025 conference held on Wednesday April 30 in Monterrey, Mexico. Below are some highlights from across steel, aluminium, ferrous scrap and non-ferrous scrap:
Tariff uncertainty remains a thorn in the industry’s collective side. The US’ on-going tariff spat with Mexico — and the rest of the world — is complicating trade flows, according to attendees. Buying in the steel sector remains very much hand-to-mouth, as holding inventory is seen as risky. Steel buyers and sellers alike continue to seek clarity on tariff levels, timing and scope.
The non-prime steel sector is alive and well. Despite import and supply chain difficulties, at least some participants are finding opportunities in the non-prime sector. They are converting unused auto sheet for construction applications. But one market participant said that some scrap dealers are skipping the recertification process for acquired non-prime coils. They are processing them directly as scrap.
More steel capacity is coming — eventually — though Gerdau’s decision to scrap its planned SBQ mill due to auto supply chain uncertainty has created some disquiet. Ahead of the conference, one source told Fastmarkets: “This is terrible news, because investments that were already underway continue to move forward. However, those that were just beginning are on hold until we know whether the tariffs will be permanent or temporary.”
A cloud has formed over the recent trend in industrial nearshoring in Mexico. This is courtesy of ongoing tariff-based consternation. Multiple global entities along the automotive supply chain chose Mexico as a strategic production hub. They were capitalizing on favorable labor costs and Mexico’s geographic proximity to the US. Despite recent announcements from automakers Hyundai and GM that they will retain a production presence in the region, attendees were not convinced that further global or US investment would be forthcoming in the near term.
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The concept that the profitability of the US’ manufacturing sector hinges significantly on an arbitrage in labor costs between the US, Mexico and other less developed countries is important. This gave some impetus to a further easing in the threat of fresh duties being levied on Mexico. But the potential to leverage cheap, hydrocarbon-based energy in the US could offset the labor disadvantage. This disadvantage has hitherto precluded the nearshoring of US manufacturing. Suggested steps to increase smelting capacity for base metals need consideration. It is severely lacking compared with steel manufacturing capabilities domestically. The shorter timespan needed to nearshore US automotive production — courtesy of plenty of semi-ready redundant assets littered across the rust belt and upper Midwest — contrasts with the ‘ground zero’ status of US smelting and refining capacity.
China continues to loom large over all global metals markets, not least those of Mexico. It was widely agreed that Chinese steel producers are unlikely to move away from basic oxygen furnace (BOF) steel production in favor of electric-arc furnace (EAF) production. Moreover, they are unlikely to relinquish their ability to strategically influence the direction of global scrap, semi-, or finished-steel or base metals markets. This is due to the region’s planned economy and ability to strategically flood global markets to the detriment of US and other global participants.
The elasticity in copper spreads and the persistent arbitrage in London Metal Exchange/COMEX pricing is expected to remain. Market volatility is due in large part to global tariff uncertainty. China is the main target of US tariff policy at present. Copper market participants continue to operate under the exchange-based volatility. The ongoing Section 232 investigation is important; it concerns the national security implications of copper imports to the US. The conclusion deadline for this investigation is in November. Domestic non-ferrous scrap pricing, which relies heavily on pricing for LME aluminium and copper and COMEX copper, has also been exacerbated by this volatility.
Fastmarkets’ newly-minted Mexican low-carbon P1020A aluminium premium has moved for the first time since its launch in March. Fastmarkets assessed its aluminium low-carbon differential P1020A, cif Mexico at $0-37.50 per tonne on Tuesday April 29, up from zero on March 25. The increase reflected interest in low-carbon material from an automotive market participant.
Market participants told Fastmarkets that without the new premiums for P1020A and 6063 extrusion billet, they had to be “creative” in order to compose price references in contracts. They did so by adding the LME price to the US P1020A Midwest duty unpaid premium, even for billet contracts.
After a period of consultation with the main participants in the Mexican market, including sellers, buyers, and traders, Fastmarkets noticed the need for transparency and price references in the country.
Fastmarkets assessed the aluminium P1020A premium, cif Mexico at $380-400 per tonne on April 22, down from $390-410 per tonne in the previous fortnight.