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OJO  \ o-ho \
An Eye on Mexico
Audaxia Newsletter
March 2022

Editorial

Kenton SchaeferFor Audaxia Logística

Welcome to OJO. This months reporting finds a mix of both positive and negative economic news coming out of Mexico. Like much of the world, Mexico too is going through a period of uncertainty brought on by global events. There are some pockets of progress, as well as some signs of difficulty ahead. But also like much of the world, Mexico keeps pushing forward.

Below, you’ll read about several main issues; a new free trade agreement currently being developed, returns to profitability by some important Mexican steel groups, and significant investments made by both foreign and domestic companies. The Mexican economy is expected to rebound by 3rd quarter and several airlines are committing to important routes via Monterrey, one of the country’s most important industrial cities (and our Corporate Headquarters). Shipping costs are again on the rise (specifically in terms of ocean freight). And volatile port congestion along the Pacific is again a considerable factor. Additionally, the severe impact of the Ukrainian crisis has reached Latin America, and its ripple effects are intensifying the economic hardships brought on by the pandemic by further adding to inflation.

Furthermore, you’ll read about the early history of Mexico City and its pre-Aztec origins along with some information on a great Baja hotel that should be spot-on for a desert getaway. This month, you’ll also see that we’ve chosen a true stainless steel marvel as our editions structural highlight not only for its composition, but for its frontier symbolism. And in the spirit of frontierism, we would like to mention that Sir Ernest Shackleton’s ship, the Endurance, was just discovered sitting at the bottom of the Weddell Sea in Antarctica, some 10,000 feet underwater where it had been laying for over 100 years. Oh how bravery can accomplish wonderful things. Bienvenidos a OJO.

Kenton Schaefer
Schaefer Stevedoring
Business Development 
& Marketing


For Audaxia Logística
A Schaefer Americas company

Email me directly.

This Month's Highlights

Mexico and South Korea Begin Talks for Free Trade Agreement

The governments of Mexico and South Korea met in Mexico City on March 1st to begin discussions which would lead to a Free Trade Agreement between the two countries. They additionally plan on holding talks that would permit South Korea to enter the Pacific Alliance giving it favorable commercial status with Chile, Colombia, and Peru.
 
Mexico Central Bank Says Ukraine Crisis Could Spur New Inflation

Mexico’s central bank on Wednesday said pandemic shocks on inflation have been deeper and longer lasting than expected, and the bank could not rule out new price pressures caused by Russia’s invasion of Ukraine. Furthermore, it expects that inflationary pressures would diminish throughout 2022 and that annual headline inflation would average 4% in the fourth quarter and decline to near the bank’s 3% target by the second quarter of 2023. It also forecast that GDP would grow between 1.6% and 3.2% this year.
 
Mexico Inflation Advances Quicker Than Forecast, Core Prices Stir Concern

Inflation in Mexico accelerated faster than expected in February, official data showed, with underlying price pressures hitting their highest level in over two decades, feeding expectations the central bank will hike interest rates higher.
 
Mexico’s AHMSA Returns to Profitability in Full-Year 2021

Mexican integrated steelmaker Altos Hornos de Mexico (AHMSA) went from a net loss of USD $106.49 million in full-year 2020 to a net profit of USD $17.4 million in full-year 2021.
 
Mexico’s Grupo Simec Returns to Profitability in Q4 2021

Mexican steelmaker Grupo Simec went from a net loss of USD $24.5 million in Q4 2020 to a net profit of USD $95.3 million in Q4 2021, the company said this week while releasing its quarterly results.
 
Metalsa to Invest USD $170 million in Apaseo el Grande Plant

The Mexican company is a leading manufacturer of structural components for the commercial and light vehicle markets. Metalsa produces for more than 30 major automotive original equipment manufacturers (OEMs) worldwide. This new plant will be producing 270,000 chassis annually for Toyota.
 
Whirlpool to Invest USD $150 Million in Mexico in 2022

Investments include USD $25 million for its Apodaca plant, USD $114 million for its Ramos Arizpe plant, and the rest for its other plants throughout the country. Whirlpool’s production is expected to increase by 30% this year.
 
OECD Expects Mexican Economy to Rebound by 3rd-Qtr

Economic growth in Mexico is expected to return to pre-pandemic levels by the third quarter this year, according to the Organization for Economic Cooperation and Development (OECD).
 
Mexican Steel Service Centers, Distributors Expect Challenging 2022

Mexican steel service centers and distributors are concerned about experiencing another year of uncertainty, with industrial and commercial operations notably lower compared with the previous year, Conadiac President Roberto Gutiérrez told S&P Global Platts.
 
Opinion | Historic Unionization at GM Plant in Mexico a Good Beginning

If workers in Mexico have suppressed wages because of a lack of labor rights, workers in the US will feel the downward pressure.
 
Aeromexico Resumes Monterrey-Madrid Route

The Monterrey-Madrid route resumes operations which connects passengers and cargo directly from the capital of the State of Nuevo Leon to the Spanish city.
 
Spirit Airlines Launches Monterrey-Austin and Monterrey-Houston Routes

In a ‘tip of the hat’ to the importance of the northern city, Spirit launches flights connecting two Texas cities to Monterrey starting June 22, the airline said in a press release. Spirit said the Austin flight will be the only nonstop flight between the two cities.
 

Analytics

US Imports for Consumption of Monitored Steel
  January '22/YTD January '21/YTD
Country Quantity in MT* Variation*
Canada 467,249 +0.65%
Mexico 394,464 +43.32%
Brazil 292,262 -60.51%

Source: U.S. Census Bureau 
* Metric tons

HRC Spot Price Mexico
Price * % Monthly % YTD
$ 1,102 ** +4.36% -23.21%


Source: Reporte Acero
* As of March 10th 2022
** U.S. dollars per metric ton

Exchange Rate: Mexican Peso
30 Day Average & Volatility
 
Currency 30 Day
Average
30 Day
Volatility
🇺🇸 1 USD 20.60 MXN 0.74%
🇪🇺 1 EUR 23.03 MXN 0.51%
🇨🇳 1 CNY 3.25 MXN 0.71%
🇯🇵 1 JPY 0.17 MXN 0.81%
🇬🇧 1 GBP 27.60 MXN 0.49%

Culture


Little Seoul in Mexico City Koreatown
To further highlight the Mexico/South Korea Free Trade Agreement which is being discussed now, we wish to show the South Korean roots already in place in Mexico. We found this article covering Little Seoul in Mexico City, and would like to pass it on to our readers. It covers its general location in Zona Rosa, an area of Mexico City famous for its architecture, lively streets, and LGBTQ friendly environment. It is one of the Americas largest Korean communities where you can find Korean-owned businesses such as; restaurants, bars, and dance clubs. All having grown in popularity thanks in part to Korea’s influence in pop-cultural around the world. Below, you’ll read about the first waves of Korean migration to Mexico in 1905 to work in Henequen plantation which produced commercial fibers out of agave plants in the Yucatan Peninsula. Many in those first waves ended up staying because of the 1910 Japanese annexation of the Korean Peninsula. That conflict made Mexico a more favorable situation for those immigrants, many of which eventually moved to Mexico City leading to the establishment of Little Seoul. This displacement touches world events today in other ways as it’s easy to imagine the Little Kyiv’s which will develop in other countries due to the Russian invasion of Ukraine. To find out more on Little Seoul; where to eat, drink, and experience Korean culture in Mexico.
 

Steel in the World


The Gateway Arch // 1965
Commonly referred to as “The Gateway to the West” in the United States, the Gateway Arch is one of the most important steel structures in the world. Located in St. Louis, Missouri, the arch is a monument to the pioneering and explorational spirit of humankind, and stands tall along the banks of the Mississippi River (one of the most well-known rivers in shipping). Designed by world-renown Finnish-American architect and designer Eero Saarinen, the arch’s construction began in early 1963 and ended in late 1965. Mr. Saarinen is considered one of the greatest mid-century American architects and is best known for his work on the General Motors Technical Center, Washington Dulles Airport, and the Tulip Chair. Contracted to MacDonald Construction Company and sub-contracted to Pittsburgh-Des Moines Steel Company, the arch is both 623 feet (190 meters) high and wide, making it the tallest memorial arch in the United States. This monumental construction weighs over 40,000MT and is comprised of structural steel, stainless steel, concrete, and bedrock. The almost 850MT of 6.33mm Grade 304 stainless steel exterior paneling also makes the arch the tallest stainless steel monument in the world. This symbol of frontierism was listed as a National Historic Landmark in 1987, and is a true wonder from up close and afar.

After You


Hotel Paradero // Todo Santos, Baja California
Our shipments of wood, fertilizer, and steel from Asia take us with regularity to places like the Port of Ensenada in Baja California. And it’s a part of Mexico we find to be extremely special. The weather and visual landscape are different than what most think of when they think of Mexico. And even though our industry may never take us to a place like Todos Santos in Baja’s southern peninsula, it’s still part of what we are trying to do in highlighting Mexico outside of what we see in our shipping and logistics industry. The Paradero Hotel caught our eye as a desert backdrop adventure where luxury meets Mexico’s wild nature. The general feel from the brutalist inspired structures designed by architects Ruben Valdez and Yashar Yektajo, combined with the areas desert tones, gives this resort a truly special sensation. Surrounded by the Sierra de la Laguna mountains, this oasis features a restaurant by Chef Eduardo Ríos (previously with Pujol, one of Mexico City’s most famous and world-renown restaurants), fishing expeditions, biking tours, and surfing adventures for a most special Mexican experience.
 

This Month in Mexican History


The Birth of Modern Mexico City // March 13th, 1325
Historians believe that in 1325 the Indian capital of Tenochtitlán (Mexico City today) was founded by a wandering group of Méxica Indians who had set out from Aztlán, about 150 years before. According to ancient prophecy, the wandering tribe was in search of a sign that would indicate where they where to build their great city empire. That sign was to be in the form of an eagle on a cactus with a snake in its beak. National folklore says that the Méxica actually saw this sign on a swampy island of the former Lake Texcoco. And it was there that they built what would eventually become the great Aztec capital and center of their extensive empire. Tenochitlán was then among the worlds largest cities in the world. At 5 times the size of London; only Paris, Venice, and Constantinople might have been larger. The ruins of this impressive city can still be seen in Mexico City’s Plaza de la Constitución which was the site of the cities original central marketplace.

March 13th, 1325 was chosen in 1925 to celebrate the 600th anniversary of the city. And from vision to legend, that eagle led to what today is Mexico City with its image emblazoned on the country’s Coat of Arms and national flag.
 
Audaxia Logística
 
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