Mexico’s automotive and the steel industries will be affected if the Covid-19 outbreak persists, said market participants.
Mexican automakers could face a shortage of auto parts from China if the Covid-19 quarantine is extended, a TST Nikkei Metales Mexico purchasing manager told David Index. Automakers have not yet informed aluminum and scrap recyclers as to whether or not auto plants will shut down as a result of the supply scarcity.
However, if the situation worsens, automakers will shut down some production lines, including assembly. The purchasing manager at TST Nikkei, which supplies products to Nissan, said that Mexican automakers have three-to-five weeks’ worth of inventory.
The likelihood that the automotive industry suffers from an auto parts shortage is very high, said a manager with Recicla Centro, an industrial recycling center, who added the Mexican auto industry is very reliant on importing parts from China.
Mexican steelmaker Grupo Simec previously warned that the virus could impact steel demand.
Nissan said it could close plants in the US and Mexico due to steel and auto parts—the latter from China—shortages.
Covid-19 has affected Mexican steel production all year, with crude steel output declining to 1.37mn mt in January from 1.63mn during the same month in 2019.
On an annual basis, car sales in Mexico declined by 6pc in January 2020 to 104,832 units, according to figures from the domestic automotive association.