Trading Market Insights: October 2024

In September, Brazil’s interest rates rose as expected, while Mexico’s lowered, aligning with trends in other major economies. Inflation in Brazil rose, while Mexico eased below market forecasts. Manufacturing PMI increased in Brazil and fell in Mexico.

The Leeco Trading team is carefully monitoring international trading market developments, particularly within the Latin American region. Here are some of the biggest headlines we are watching.

Brazil Consumer Prices Pick Up

In September, Brazil experienced a rise in consumer prices compared to August, driven by higher costs for electricity and food amid a major drought. This development has fueled speculation about potential interest rate hikes from the central bank. Prices increased by 0.44% in September, closely aligning with the market’s anticipated 0.46% rise.

Mexico’s Steel Product Exports Falls

Mexico’s finished steel product exports to the world totaled 223,000 metric tons in August, down 13.2% year-over-year. It is the lowest volume in the past 46 months (since November 2020). Mexico’s steel trade flow with the world totaled 1.3 million metric tons, down 10.8% from August of last year. Mexico is a deficit industry, down 9.5%.

Petrobras Supplies Gas to Ternium

Petroleo Brasileiro S.A. (Petrobras) is partnering with one of the top steel producers in Latin America, Ternium, to supply natural gas to the latter’s plant in Rio de Janeiro. The agreement marks Ternium’s migration from the captive market to the free market in Rio de Janeiro, where it relies on a firm supply of natural gas provided by Petrobras. The two companies are betting on developing solutions to enable Brazil’s open, sustainable and ever-growing trading environment.

Latin America Growth to Slow

Economic growth across Latin America and the Caribbean is seen slowing to 1.9% this year from 2.1% in 2023 before accelerating again in 2025, according to the World Bank. The bank warned that the region has so far missed the opportunity for growth brought on by global changes to supply chains. Key reasons for this remain the high cost of capital, low education levels, subpar infrastructure and social instability. The 1.9% growth estimate figure has accelerated compared with previous estimates of 1.8% in June and 1.6% in April. Yet growth in the regions two largest economies, Mexico and Brazil, is forecast to slow to 1.7% and 2.8% respectively, down from 2023 expansions of 3.2% and 2.9%.

This information is an excerpt from Leeco Trading’s October 2024 Trading Market Report newsletter.

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