The tariffs on Mexico (or threat of) was the biggest news of the past month while the scrap metal market reaches its lowest point of 2019.
As summer heats up unfortunately the scrap metal market hasn’t followed suit. The constant drama that has been playing out between the U.S. and other key players related to the international trade wars has kept the scrap market reigned in. These constraints have led to the lowest value for scrap steel through the first half of 2019.
While not falling as much as last month, the value of scrap steel fell over 1% again and is now almost 18% lower than the first half of 2018. The nationwide average price per ton of crushed auto bodies decreased to $167/ton. Already the lowest the market has been in 2019, it is also the lowest it has been since December of 2017.
Last month, we recognized that the markets across the country do not always grow consistently but that last month all five zones did happen to decrease. The June report was just as consistent across the board. Each zone decreased between .5% and 2.2%, there was no regional market across the country that had a more significant decrease than any other.
Industry News: The threat to impose tariffs on Mexican imports that directly effects the U.S. auto industry was put on hold for now.
The beginning to June started with a threat to impose escalating tariffs on imports from Mexico. Why this is particularly problematic in relation to the scrap metal market and specifically scrap steel from recycled cars is that the U.S. imports more vehicles and parts from Mexico than any other country in the world. According to the Wall Street Journal, the US. imported $52.6 billion of vehicles and $59.4 billion of parts in 2018 from Mexico.
The trickle down effect could be potentially damaging an already hampered scrap metal market. Tariffs on Mexican imports would place additional speed bumps on the automotive market for both sales and jobs. This was immediately reflected in auto executives and lobbyists for the industry voicing their displeasure and wish for these tariffs to be avoided. Fortunately, a week after the threat of these tariffs were imposed they were called off or “indefinitely suspended.” While off the table for now it is still worth monitoring as we know things tend to change in an instant .