Mexican non-ferrous scrap dealers expect "more aggressive scrap procurement" in the coming months as demand from the country's growing auto sector is set to rise further after a strong year, the Bureau International de Recycling (BIR) said in its quarterly Latin America newsletter. America on October 10.
According to Alejandro Jaramillo of Glorem SC, a recycling service provider and chairman of the BIR Latin America committee, increased demand is especially likely as consumers begin to “realize that current premiums for virgin aluminum are much higher than under 2024 contracts.”
However, expectations of improvement follow a lull in recent months, possibly related to the uncertainty caused by the Mexican presidential election. Several auto industry suppliers purchased lower volumes of scrap than in previous years, and scrap recyclers have not seen an increase in scrap generation typically associated with auto production, although the Mexican auto industry appears to be thriving, Jaramillo wrote in the bulletin.
“It is curious that the high performance of the automotive industry is not [yet] visible in the processing sector scrap,” he said.
Mexican Auto Industry Production rose 6.1% year-on-year from January to September, with export sales up 7% and domestic sales up 10.5%. “Given that the auto industry is Mexico's main source of foreign investment, these numbers strengthen our country's economy,” Jaramillo said.
"However, this power will also be a point of contention in America, where both [political] parties are feeling voter pressure to create more jobs in the US," he noted.
The new President of Mexico, Claudia Sheinbaum Pardo, took office on October 1 and , is expected to stick to the same policies as the previous government, as she is also from the left-wing populist Morena National Regeneration Movement party. For businesses, that means being prepared to further raise the minimum wage and other labor reforms that will make Mexican labor more expensive, Jaramillo said.
“As is usually the case in such cases, it will be more difficult for small and medium-sized companies to adapt to the new laws,” he said. This usually concerns scrap dealers, he pointed out.
