Mexico’s aluminum prices have declined over the last week because coronavirus fears have caused volatility between the Mexican peso and US dollar, market participants told Davis Index.
A seller at JRC Commercial, a non-ferrous recycling firm in Puebla, said aluminum prices fell 3-6pc over the last week despite a material shortage, indicating the exchange rate is so volatile that it has trumped the laws of supply and demand.
JRC exported alumuminum scrap to Brazil, South Korea, and some European countries in 2019, and while demand from these countries remains, material is scarce.
Aluminum sales prices have also decreased in the Bajío region, a purchasing manager at TST Nikkei Metales Mexico told Davis Index without disclosing the percentage of the fall. However, he noted that aluminum supply is insufficient because suppliers stockpiled the material in an attempt to recover the profits they lost last year when prices fell.
This has resulted in an oversupply where the product is sitting in warehouses but is not for sale.
Aluminum scrap prices decreased by 10pc in 2019 amid lower demand for products supplied to the automotive industry.
The aluminum industry expects the market to recover after the first quarter of 2020, boosted by demand from rising construction projects in the country and automotive production.
Car production fell by 4.1pc to 3.7mn units in 2019, and exports declined by 3.4pc to 3.3mn vehicles, according to the National Institute of Statistical and Geographic Information.