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As North American ferrous scrap demand rises amid expanding scrap-consuming Electric Arc Furnace (EAF) output capacity, Mexico and the southern US are two regions that will see a surge in competition for scrap and iron metallics.
This makes reliable price forecasts ever more important tool for scrap market participants in the region, and, in January, Fastmarkets will launch several new Mexican scrap price forecasts to complement our suite of US scrap price forecasts.
Mexican ferrous scrap demand is set to rise amid a planned 23% increase in EAF capacity in Mexico over the coming three years, which in part has been spurred by moves in North America to nearshore steel and manufacturing production.
Similarly, US EAF capacity is projected to rise by around 18% on its 2022 level, with much of US capacity plans being heavily focused in the south. This builds on several rounds of EAF capacity increases in recent years in North America, with EAF production now the leading steel production route in both Mexico and the US.
The increasing EAF output will further increase competition for scrap in Mexico from both domestic consumers and those in the US who seek to pull volumes from the region to support EAF production in southern US states.
Currently, Mexican scrap consumption is estimated to be around 15 million tonnes a year, with 2022 consumption up by 6% on pre-Covid levels seen in 2019. Meanwhile, exports from the country have been picking up, and on an annualized basis, Mexican exports in 2023 are expected to hit 917,000 tonnes, more than double a recent low in 2016 of 415,704 tonnes.
These factors have already heightened Mexican scrap price volatility, with the Monterrey HMS No.1 delivered mill price for example having spanned $225 in 2023, and $313 in 2022, compared to $168 across 2016 to 2020.
Fastmarkets will launch several new price forecasts for the Mexican scrap market in January. These will cover busheling, shredded and HMS grades in the Monterrey and Bajio markets, with these prices forecast out to two years.
This will allow consumers of Mexican scrap to get a view on price dynamics and outlooks, giving confidence to market participants as they plan for the future.
Fastmarkets’ forecast methodology combines our in-depth knowledge of the North American scrap sector with machine learning applications to bring insights and build on Fastmarkets’ already trusted North American price forecasts.
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