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Mexican scrap imports set to surge

Keywords: Tags  scrap, Mexico imports, Claudio Gonzalez Carrillo, Reciclacentro Desperdicios y Servicios Integrales, Mexican Steel Forum, Sean Davidson

MONTERREY, Mexico — Mexico will more than quadruple its ferrous scrap imports in the coming years as domestic collections fail to keep pace with the country’s rapid growth in steel production, according to one scrap company.

Mexico’s annual steel production is expected to rise to more than 24 million tonnes by 2016 from 18 million tonnes last year, Claudio Gonzalez Carrillo, a mechanical engineer at Toluca, Mexico-based recycling company Reciclacentro, told delegates at AMM’s 18th annual Mexican Steel Forum in Monterrey.

He said he expects the domestic generation of obsolete and prime scrap to grow marginally over the next four years, which would put more pressure on Mexican steel producers to import scrap. "Raw steel production will increase 30 percent in the next three to four years, but there won’t be that much of a percentage increase in scrap generation," he said.

Carrillo speculated that the domestic scrap flow would reach around 9 million tonnes annually by 2016, up just over 1 million tonnes from the present.

However, the addition of 6 million tonnes of steel production will cause a "movement in force towards scrap imports," Carrillo said. As a result, Mexico will import around 4 million tonnes of scrap in 2016 vs. total 2012 scrap imports that Carrillo estimated at 700,000 tonnes. About 90 percent of Mexico’s scrap imports come from the United States, he noted.

Imports will trend only marginally higher in 2013 as the country waits for announced projects to come online, but the spike will make itself felt in 2015 and 2016, Carrillo said.

Reciclacentro ships about 10,000 tonnes of ferrous scrap per month from three locations to different consumers in Mexico, he said.

Prices for No. 1 busheling scrap were within a $50 margin of its average price last year and No. 1 heavy melt prices were within a $40 range, and upward or downward price trends were influenced mainly by the U.S. scrap market, Carrillo said. Scrap prices in Mexico dropped significantly in January despite prices moving sideways in the United States

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