Mexico aluminum scrap merchants expect 'more aggressive buying in coming months' on strong auto sector

Mexican non-ferrous scrap merchants expect “more aggressive scrap purchasing” in coming months, as demand from the country’s growing auto sector should pick up further after a good year so far, the International Recycling Bureau (BIR) said in its Latin America quarterly bulletin Oct. 10.

An upwards swing is seen particularly likely in demand for aluminum scrap, as consumers start to “realize that current premiums for primary aluminum are much higher than they were for 2024 contracts,” said Alejandro Jaramillo of Glorem SC, a recycling services provider, and chair of the BIR Latin America Committee.

Expectations for improvement, however, follow a lull in recent months, perhaps linked to uncertainties generated by Mexico’s presidential election. Several auto industry suppliers have purchased lower scrap volumes than in previous years and scrap processors have not noticed any greater generation of scrap typically linked to auto production, even though the Mexican automotive industry is apparently flourishing, Jaramillo wrote in the bulletin.

“Curiously, the automotive industry’s great performance is not [yet] visible on the scrap side,” he said.

Mexican automotive industry production rose 6.1% on year between January and September, with export sales up 7% and internal sales 10.5%. “Considering that the automotive industry is Mexico’s primary foreign investment source, these numbers strengthen our country’s economy,” Jaramillo said.

“However, this strength will also be a point of contention with America where both [political] parties feel the pressure of voters to bring more jobs to the USA,” he noted.

Mexico’s new President Claudia Sheinbaum Pardo took office Oct.1 and is expected to follow the same policies as the previous government since she is also from the Morena national regeneration movement left-wing populist party. For businesses, this means being prepared for more increases in the minimum wage and other labor reforms that will make Mexican workforces more expensive, Jaramillo noted.

“As usually happens in these cases, small and medium-sized companies will have a more challenging time adapting to the new laws,” he said. This would normally include scrap merchants, he indicated.