Chip shortages affected automotive production in Mexico during the months of May and June. The country produced 1.6 million units during the first six months of the year; this is still 20% below the 2 million made in the opening half of 2019.
Decelerating production was felt strongly during June when local consumers’ demand for scrap aluminium used for secondary alloys practically came to a halt. The export market provided some relief but is not trouble-free as the lack of empty containers, scarce vessel space and volatile sailing schedules presented many challenges to exporters.
July has seen some modest recovery in demand from local consumers, and most market players - both yard operators and consumers - are optimistic that August will be a better month and that the worst of the chip crisis is likely already behind us.
Demand for 6xxx series scrap has remained robust in the last couple of months and is likely to continue in the same tone for the rest of the year. Scrap copper continues to be supported by steady demand for export and the usual discrete domestic demand.
In other developments, the exchange rate has fluctuated between MX 19.77 and MX 20.67 to the US dollar over the last 30 days. While most Mexican states have fully reopened all production, leisure and educational activities, some are seeing sporadic spikes in COVID cases and are temporarily closing certain education/leisure activities. Industrial production across the country continues to be free of COVID-related restrictions.
Glorem SC (MEX), Vice-President of the BIR Non-Ferrous Metals Division