Managing Expectations AMM Cancun 2015
Managing expectations
Brief History Founded in 1980 in Monterrey, Mexico Ferrous and non-ferrous scrap 800+ employees One of the largest integrated scrap groups in Mexico 120+ Industrial Customers in Mexico, Texas and South America 10 Fortune 500 companies 10 facilities, 3 with rail access
Operating Locations
Highlights First company in Mexico to buy ferrous and non-ferrous scrap in Mexico First company in Mexico to offer a one-stop INTEGRAL SOLUTION for your scrap First IMMEX certified scrap company Only Mexican company to obtain the Chinese Government export permit (AQSIQ). International Offices: USA and Mexico Transparency and Trust Relations of more than 30 years both with customers and suppliers. Rail Access: Ability to export scrap by rail to USA. Honorable: We praise ourselves as the most honorable and reliable scrap company in Mexico
Integral Solution Metallic Scrap Haz-Mats Wood Trash Plastic Cardboard
Managing Expectations End of 2012 High hopes for 2013 New President = Bright future Boosting economy = Higher scrap demand End of 2013 Depressed construction sector Government negotiating structural reforms 2014 boom in projects = Bright future New Reforms + Elections in 2015 + High Oil Price + Higher government tax income = A perfect scenario! End of 2014. Not for the book of records. Automotive OK but construction still depressed International makets not doing great Lots of imports, difficulties to export Mexican products So, what is for 2015?
DATE 16-Jan-14 30-Jan-14 12-Feb-14 25-Feb-14 10-Mar-14 21-Mar-14 3-Apr-14 16-Apr-14 29-Apr-14 12-May-14 23-May-14 6-Jun-14 19-Jun-14 2-Jul-14 16-Jul-14 29-Jul-14 11-Aug-14 22-Aug-14 4-Sep-14 17-Sep-14 30-Sep-14 13-Oct-14 24-Oct-14 6-Nov-14 19-Nov-14 4-Dec-14 17-Dec-14 1-Jan-15 14-Jan-15 Oil Prices USD/Barrel $120 $110 $100 Crude Oil and MXP/USD Exchange Rate $15 $15 $14 $90 $80 $70 $60 $50 $14 $13 $13 $12 Exchange Rate MXP/MXP $40 $12 Crude Oil Prices: West Texas Intermediate (WTI) Exchange Rate MXP/USD
Spread Domestic busheling Sale Price vs AMM No.1 busheling Houston Dealer Selling $50.00 $- 3-Nov-14 10-Nov-14 17-Nov-14 24-Nov-14 1-Dec-14 8-Dec-14 15-Dec-14 22-Dec-14 29-Dec-14 5-Jan-15 12-Jan-15 19-Jan-15 26-Jan-15 $(50.00)
17-Jan-14 31-Jan-14 14-Feb-14 28-Feb-14 14-Mar-14 28-Mar-14 11-Apr-14 25-Apr-14 9-May-14 23-May-14 6-Jun-14 20-Jun-14 4-Jul-14 18-Jul-14 1-Aug-14 15-Aug-14 29-Aug-14 12-Sep-14 26-Sep-14 10-Oct-14 24-Oct-14 7-Nov-14 21-Nov-14 5-Dec-14 19-Dec-14 2-Jan-15 16-Jan-15 USD (cents) / mmbtu 600 Natural Gas & Iron Ore Prices 140 USD/MT 575 550 130 525 500 120 475 110 450 425 NATURAL GAS 100 400 375 350 325 IRON ORE INDEX 90 80 Gas Natural Down 34% in 1 year 300 275 70 IRON ORE Down 46% in 1 year 250 60
What to Expect Mexico 2015 SUPPLY PRIMARY SCRAP DEMAND Volumes will continue to improve through 2015 and 2016. Booming auto industry will drive scrap supply in Mexico. Strong correlation to US auto industry which is expected to grow. Manufacturing industry to grow 3.5% Heavy industry to continue growing through 2015 and 2016 NET BALANCE Tube production hurt by low oil prices. Import duties against Mexican products hurting Mexican long product mills. Growing amount of imported finished semifinished products hurting Mexican and US mills. Flat product producers who consume primary scrap not increasing capacity Less demand of scrap by US mills will make cheap scrap available in Texas Low gas and iron ore prices will continue to pressure integrated mills. Downward pressure for prime scrap prices in Mexico, faster that USA. Primary scrap looking for homes: Some will have to be exported. Prime scrap prices departing from US based indexes.
What to Expect Mexico 2015 SUPPLY SECONDARY GRADES DEMAND Mexico will continue imports to compensate deficit of secondary and cut grades. US Dollar / Peso parity may prevent prices to further erode. Scrap yards playing it conservatively keeping low inventories. BALANCE Demand will be kept depressed first half of 2015 as construction does not seem to improve. Second half may improve boosted by US economy. Low oil prices will impact consumption of secondary grades in Mexico Scrap volumes to remain at balance. Import market working against oligopoly market. Stronger correlation to US secondary scrap prices and parity.
Summary Surplus of prime scrap in Mexico looking for international homes. Primary and secondary grades affected by oil and imports of finished and semi finished products. US Dollar parity rate will affecting scrap consumers who sell into Peso market. Departure from US based price indexes, specially consumers who do not have access to international markets. Strong need of a Mexican based AMM index.
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