Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Mexico’s scrap and steel industry expects the federal government to develop a new infrastructure strategy that will raise scrap and steel product demand following stunted growth in the last year.


The scrap metal and steel industries began 2020 tenuously, but, as large volumes will be needed, prices could improve, said a regional commercial manager at Roca Acero, a Nuevo Leon-based scrap processing firm.


However, as long as no new capital is injected into the country, conditions for the industry would hardly improve, continued the manager, who added that, on the heels of many halter projects, the construction industry has been in freefall.


Last year, Mexico’s President Andrés Manuel López Obrador, halted construction of major infrastructure projects, including a new international airport in Mexico City. However, his government announced an infrastructure plan worth 859bn peso ($ 42.9bn), which includes constructing 147 projects through 2024.


Construction activity in the country fell 5pc in 2019 because there were too few specialized construction and engineering works following a reduction of steel demand, said National Statistics Agency.


Steel consumption could rise in tandem with the government fast-tracking major infrastructure developments, including the Santa Lucia Airport in Mexico City, for which construction has already begun, said Claudio González, a commercial manager at Recicla Centro, an industrial recycling center.


Other noteworthy infrastructure developments that could boost scrap metal and steel consumption are the Dos Bocas oil refinery, the Isthmus of Tehuantepec interoceanic corridor—which includes the modernization of ports and railways—the Maya railway in the south of the country, and the development of drilling wells to be used for fuel production.


Mexico’s crude steel production declined by 8pc to 18.6mn mt in 2019—production reached 20.2mn mt in 2018, according to the National Confederation of Steel Distributors. In December, Mexican crude steel production reached 1.49mn mt, down by 7.3pc from December 2018.

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