Issue – April 2019

2019 continues to present different challenges for our industry, including uncertainty regarding policy. At the time of writing, China is yet to renew import licences which are set to expire on July 1 this year for many of its scrap metal consumers. At this point, it is not clear when renewals will be issued, what scrap grades will be covered and which ones might be excluded. Likewise, the USMCA free trade agreement between the USA, Mexico and Canada has yet to be ratified by the legislative bodies of the three countries. Removal or permanence of tariffs on steel and aluminium, although not on scrap steel or scrap aluminium, are part of what remains to be finalised.    

Meanwhile, the abundance of scrap and limited processing capacity within North America, including Mexico, have caused scrap prices to plummet over recent months. Several grades of scrap aluminium, such as used beverage cans and old sheet, have now reached such a low level that there has been a negative impact on scrap generation. Low prices, and especially continuously falling prices, discourage the collection of obsolete scrap; as a result, major traders and yards with yearly delivery commitments are now struggling to meet them and have duly started chasing some prompt delivery scrap units at a discrete premium to the rock-bottom prices that we have been seeing.

Overall, the Mexican market remains well supplied and thus it is likely that more Mexican scrap units will find their way to the export market - not necessarily to the USA but increasingly to destinations in Asia and Europe.

As you will read below, my colleague Roger Amarante offers interesting insights into the Brazilian scrap steel market while the founder President of this Committee, Enrique Acosta, provides a fascinating commentary on the use of technology to improve the security and integrity of international trade by container.

We look forward to seeing you in Singapore to discuss trade opportunities and challenges in our Latin American region.

Alejandro Jaramillo - Alejandro Jaramillo (Mexico)

Alejandro Jaramillo

Glorem SC (MEX), Chairman of the BIR Latin America Committee

Issue – April 2019