Mexican ag, LPG prices drive July inflation

Spanish Market: Metals, Natural gas
08/08/24

Gains in agriculture and LPG gas price helped drive Mexico's headline inflation in July to its highest level since May 2023, although core price gains continued to ease.

The consumer price index (CPI) rose to an annual 5.57pc in July, up from 4.98pc in June and increasing for a fifth consecutive month, Mexico's statistics agency Inegi said today.

A big driver behind the July reading are fruit and vegetable prices, which climbed by 24pc in July, compared with 18pc in June.

Farm goods, and tomatoes in particular, have been hit by a double dip of bad weather with two months of extreme drought before flooding rains began to hit in late June at an active start to this year's hurricane season.

Also hitting the consumer price index (CPI), energy inflation reached 9.2pc in July from the same month in 2023. The group was led by higher LPG prices, up 26pc over last year. Low-octane gasoline prices were next highest, up 6.9pc. Electricity prices followed, rising 5.35pc on an annual basis. Domestic natural gas was the only energy item to decline, dropping 3.4pc in July.

Banorte, however, stressed that core inflation – which excludes volatile food and energy – did ease again in July, slowing to 4.05pc for the month from 4.13pc in June, marking 18 consecutive months of easing.

In a note, Banorte said energy prices stand to benefit from base calendar effects in the coming months.

Mexican bank Citibanamex noted the lower core as well in a note, adding how the recent rains are beginning to reach the most drought stricken areas, and this should help begin to contain non-core prices. "We expect annual headline inflation to resume a gradual downward trend starting in August, and we maintain our estimates for the end of 2024 at 4.4pc for headline inflation and 4.1pc for core inflation," the bank said.

The CPI increased by 1.05pc in June from the prior month, when it posted a 0.38pc monthly gain, said Inegi.

The central bank's monetary policy committee today lowered its reference interest rate to 10.75pc from 11pc, its first reduction since March.

The central bank cited the continued drop in core prices, adding the inflationary environment might allow for further rate adjustments, considering "global shocks will continue fading and the effects of weakness in economic activity."

By James Young

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08/07/25

Immigration raids pressure south Texas scrap flows

Houston, 8 July (Argus) — South Texas ferrous scrap yards are facing inflow headwinds as increased efforts by US immigration officials to detain and deport non-citizens affect peddler traffic and the labor force. Several market participants speaking to Argus on condition of anonymity have reported a steep decrease in scrap inflows along the US-Mexico border in Texas since the start of President Donald Trump's second term in mid-January due to raids by US Immigration and Customs Enforcement (ICE) agents. Sources surveyed by Argus estimated a 25-50pc reduction in scrap being sold to yards in south Texas as a result of the raids, but they struggled to provide a more specific volume of scrap not delivered. Peddler traffic — scrap sold to yards by the public — accounts for a considerable percentage of material acquired by yards in the region, a market participant said. Sources said that many peddlers, as well as some workers at yards, are non-citizens and risk deportation if detained by ICE. The reduction in scrap flows is much larger than what would be seen from peddlers and yard workers who have been detained by ICE or the US Customs and Border Protection agency, they said, and is likely the result of a wider pull back from peddlers, nervous over the risk detention and deportation. Several yards reliant on peddler traffic or undocumented labor have shut in recent weeks, sources familiar with the matter said. ICE has been raiding communities along the border since early in the year when President Donald Trump started his second term. The recently-passed US budget bill allocated $45bn to, in part, hiring "thousands" of new ICE and Border Protection agents. It is unclear how much scrap is sold to US scrap yards by sellers who lack US citizenship, but continued pressure on those sellers and undocumented workers could cause supply tightness and labor shortages in south Texas yards. The monthly Texas ferrous scrap trade is expected to settle today, with several mills bidding all grades flat from June settlements. By Marialuisa Rincon Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Tokyo unlikely to yield on car levy despite US pressure

08/07/25

Tokyo unlikely to yield on car levy despite US pressure

Tokyo, 8 July (Argus) — The Japanese government is unlikely to offer concessions to the US for an automobile deal in stalled trade talks between the countries, even after Washington announced plans to raise tariffs on Japanese imports. Each government has its own interests to defend, the country's minister for trade and industry (Meti) Yoji Muto said on 8 July, reiterating that the automobile sector is a key industry for the Japanese economy and is vital to national interests. Muto reiterated Tokyo's intention to pursue a resolution through negotiations, but without compromising its core economic priorities. This suggests that there is little space for Tokyo to accept auto tariffs imposed by the US. This comes after US president Donald Trump announced plans to impose additional tariffs of 25pc on all imports from Japan from 1 August, slightly higher than the initial rate of 24pc set in April. Trump threatened to impose an even higher levy if Tokyo moves to retaliate against the measure. "We have had years to discuss our trading relationship with Japan, and have concluded that we must move away from these long-term, and very persistent, trade deficits engendered by Japan's tariff, and non-tariff policies and trade barriers," Trump said in his official letter to the Japanese government. "Our relationship has been, unfortunately, far from reciprocal." Tokyo and Washington have held seven trade talks on the US tariff since mid-April without reaching an agreement. Japan was initially seen as a frontrunner among other US trading partners in the negotiation, but progress has stalled partly because of disagreements over the auto sector. The Trump administration has long expressed strong dissatisfaction against the imbalance in US-Japan car trade. Japan exported around 1.3mn automobile units to the US market in 2024, and only purchased 14,724 units of US vehicles during the same period, according to Japanese customs and industry group the Japan Automobile Manufacturers Association, respectively. Tokyo has declined to disclose the details of the ongoing negotiations, but the country's prime minister Shigeru Ishiba in mid-June reiterated that the automobile sector is vital to Japan's national interests, underscoring the car sector as a key sticking point in the trade talks. By Yusuke Maekawa and Kohei Yamamoto Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Alberta, Ontario to study oil pipelines, port, rail

07/07/25

Alberta, Ontario to study oil pipelines, port, rail

Calgary, 7 July (Argus) — Alberta and Ontario plan to study new trade routes to boost economic activity between the two provinces and beyond, with an interest in exporting oil and gas through Hudson Bay, leaders said today. Alberta premier Danielle Smith and Ontario premier Doug Ford signed two memorandums of understanding to drive interprovincial trade and major infrastructure development, including pipelines and rail lines. The broad intent is to further connect Alberta's energy resources to Canada's most populous province, and on to foreign partners, using steel from Ontario. "Built using Ontario steel, new pipelines would connect western Canadian oil and gas to existing, and potential, new refineries in southern Ontario," said Ford during a joint press conference in Calgary, Alberta. A "potential" new deep sea port at James Bay on the south side of Hudson Bay in northern Ontario would also enable further export opportunities for land-locked Alberta, which is trying to get more pipelines built before growing oil sands production fill existing capacity. Oil and gas would need to flow across Saskatchewan and Manitoba to get to Ontario. Alberta has taken an all-of-the-above strategy in its pipeline pursuits, calling for more egress in all directions, including enhanced access to Pacific Rim markets via a 1mn b/d bitumen pipeline to British Columbia's (BC) coast. "Having access to the northwest BC coast is essential to being able to get to Asian markets, and that's the one that we hear the most enthusiasm for," said Alberta premier Danielle Smith, who expects to have some "good news" on that front in a few months. Federal regulations need to be undone: premiers Smith and Ford called on the federal government to significantly amend or outright repeal the onerous Impact Assessment Act and other legislation that has stifled investment, including the oil and gas emissions cap, Clean Electricity Regulations and the Oil Tanker Moratorium Act that currently prevents an oil pipeline to BC's northwest coast. "No one will build a pipeline to tidewaters if there is a ban on tankers," said Ford. "It is the craziest thing I've ever heard of . . . a ban on tankers." Ford is the latest premier to side with Alberta's stance on federal oversight after Saskatchewan premier Scott Moe did in June . Ford's automobile , steel and aluminum sectors have been caught in US president Donald Trump's crosshairs, spurring the premier to look elsewhere to shore up trade, including within Canada. But hostilities from south of the border are not new for Ontario, whose refining sector relies on Enbridge's 540,000 b/d Line 5 cross-border pipeline. "We have the governor of Michigan constantly threatening to close down the pipeline," said Ford. "Do you know the disaster that would create in Ontario?" To both kickstart a lagging economy and pivot away from the US, Canadian prime minister Mark Carney fast-tracked Bill C-5 through Parliament last month to allow "nation building" projects to bypass regulatory hurdles. To be considered for the new "National Interest Projects" list, a project should strengthen Canada's autonomy, provide economic benefits, have a high likelihood of completion, be in the interests of Indigenous groups, and contribute to meeting Canada's climate change objectives. "The days of relying on the United States 100pc, they're done, they're gone," said Ford. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Drilling slowdown undermines Trump’s energy dominance

07/07/25

Drilling slowdown undermines Trump’s energy dominance

New York, 7 July (Argus) — US shale producers expect to drill fewer wells in 2025 than they initially planned to at the start of the year, dealing a potential blow to President Donald Trump's goal of unleashing energy dominance. Almost half of the executives quizzed by the Federal Reserve Bank of Dallas in its second-quarter 2025 energy survey have scaled back their anticipated drilling in response to lower crude prices. The decline was most notable among the large operators — or those with output of at least 10,000 b/d — that now account for about 80pc of total US production, according to the bank. The anonymous survey, which gauges the pulse of the shale heartland, has become an outlet for industry insiders to vent their growing frustration at the Trump administration, and executives from exploration and production (E&P) firms offered a withering criticism of the president's tariff policies and unrelenting push for lower oil prices that have contributed to an industry-wide slowdown. "It's hard to imagine how much worse policies and DC rhetoric could have been for US E&P companies," one unidentified executive wrote. "We were promised by the administration a better environment for producers but were delivered a world that has benefited Opec to the detriment of our domestic industry." The survey found that activity contracted slightly in the three months to the end of June, with firms becoming increasingly uncertain about the outlook. "The key point from this survey release is that conditions deteriorated for companies in the oil and gas sector this quarter, with survey responses pointing to a small decline in overall activity as well as oil and gas production," Dallas Fed senior business economist Kunal Patel says. The deteriorating outlook for shale comes as the Opec+ group has stepped up efforts to unwind past output cuts, which might help it to regain market share. But the White House argues that efforts to remove permitting obstacles will help the homegrown oil industry to thrive over the longer term, bolstered by Trump's One Big Beautiful Bill that paves the way for expanded oil and gas leasing. Still, that did not stop executives in the latest Dallas Fed survey from complaining that Trump's " Liberation Day chaos " has jeopardised the sector's prospects, and recent volatility is inconsistent with the president's "Drill, baby, drill" mantra. One drew attention to calls from some within the White House for a price target of $50/bl. "Everyone should understand that $50 is not a sustainable price for oil," the executive said. "It needs to be mid-$60s." Firms were also asked about how their production would change at lower prices. A slight decline was expected if oil prices hovered around $60/bl over the next 12 months, while a significant pullback was anticipated if oil retreated as far as $50/bl. Steel yourself About a quarter of producers estimated that tariffs have increased the cost of drilling and completing a new well by as much as 6pc. And about half of the surveyed oil field services firms expect a recent increase in US steel import tariffs to result in a slight decline in customer demand in the next year. "Despite efforts to mitigate their impact, the scale and breadth of the tariffs have forced us to pass these costs on to our customers," one services firm executive wrote. "This comes... when the economics of oil and gas production are already challenged due to the dynamics of global oil supply and demand." On top of this, firms expect challenges related to the huge volumes of water produced alongside oil in the top Permian basin of west Texas and southeastern New Mexico to act as a constraint on drilling in the next five years. "Water management continues to disrupt plans and add significant costs," one executive said. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Eurometal conference focuses on protectionism/autarky

04/07/25

Eurometal conference focuses on protectionism/autarky

London, 4 July (Argus) — The themes of trade protection and greater self-sufficiency dominated discussions at Eurometal's 75th anniversary conference in Luxembourg this week, where sentiment remained distinctly downbeat. European mills are suffering from high import penetration and softening demand. Axel Eggert, director-general of European steel association Eurofer, said 128pc of traditional import flows can enter the market duty-free, while demand has fallen by 30mn t in recent years, giving imports an outsize share. In "normal" market environments, imports would decline alongside demand, rather than increase, Eggert added, suggesting domestic capacity utilisation was close to 65pc, a level at which it is difficult to turn a profit. Illustrating the difficulties of the sector, Tata Steel is axing one in three white-collar jobs and one in five blue-collar jobs, as it looks to find a more sustainable footing. Tata's Ijmuiden plant is the lowest cost slab plant in western Europe. Eurometal itself is lobbying for import measures on steel intensive goods, as demand for product sold by its members has been affected by cheaper imports of components and finished products from Asia. Eurometal represents steel distributors and importers. Its president, Alexander Julius, reiterated calls for evidence from members, and the wider supply chain, of difficulties caused by downstream imports. On the sidelines of the conference, one automotive supplier said there was no chance for European businesses to compete with Asia. He cited Chinese electric vehicles being sold at around $20,000, much cheaper than western alternatives. China's strong grip over the battery supply chain gives it an advantage that will be difficult to overcome, he said. The European Commission understands the plight of the industry and is eager to act, but executional performance is the big key, speakers and attendees said; bureaucracy in the EU and its intention to remain WTO-compliant hampers speedy implementation of policies, delegates said. Anthony de Carvalho, head of the OECD's steel unit, said policymakers are much more aware of the situation facing the industry and have real ambition to take tangible actions — one-fifth of trade measures are being circumvented, according to WTO analysis. Europe will remain less competitive than other geographies, according to Antonio Marcegaglia, head of Europe's largest coil importer, Marcegaglia. He supported the need for stricter safeguards and tariffs, but also said Europe needed to avoid isolationism, given its high energy costs and likely need to depend on imports of certain products, such as direct reduced iron. Marcegaglia said decarbonisation was an "ideological agenda" that had not fully considered the impact on industry, while also challenging the benefit such policies had on financial market participants, while leaving the actual industry hamstrung. Marcegaglia also said there will likely be big cuts in Chinese production, as the country cannot rely on low-priced exports, given increased trade barriers. Julian Verden, managing director of London trader Stemcor, remained outspoken in his support for imported product. In response to Eggert's presentation, he said the safeguard was "designed to create an ideal market for the producer" and was much too punitive, especially without real-time quota tracking. Another speaker told Argus that competitiveness at a local level is defined by the global market, and that tariffs can only be a temporary reprieve where companies should work on their own efficiency and competitiveness. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Mexican ag, LPG prices drive July inflation

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