The coronavirus pandemic continues to be the major factor impacting global economies and international trade. Albeit slow, most Latin American economies continue to recover in June from disruptions caused by the coronavirus pandemic earlier in the year. However, Leeco® Trading’s team is closely watching recent surges in major importing and exporting countries.

No one can predict the future, but this post is a collection of the metrics and news pieces our team is watching to help better understand the international trading landscape.

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Market Metrics to Watch

Manufacturing PMI

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Brazil
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Mexico

The manufacturing purchasing managers index rose dramatically for Brazil in June to 51.6, up from 38.3 in May, as manufacturers resumed normal production operations. The PMI in Mexico, however, remained mostly stagnant between May and June, increasing slightly from 38.3 to 38.6.

Capacity Utilization

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Brazil
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Mexico

May capacity utilization figures for Brazil and Mexico, Latin America’s largest economies, remained lower than normal at 69.9 and 45.4, respectively. Brazil saw in notable increase in capacity utilization between April and May (67 to 69.6), but Mexico’s increase was more modest (44.7 to 45.4).

Imports

Below is a chart showing import levels of key Latin American countries Mexico, Brazil and Chile, as of June 2020. Imports increased for Mexico and Chile in June, but decreased substantially for Brazil.

Increased Car Production

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Brazil
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Mexico

Brazil and Mexico saw major declines to domestic car production as a result of halted manufacturing to stem the spread of the coronavirus. Both countries saw increases in car production in June, with Mexico’s production increasing from 22,120 units in May to 238,946 units in June. Brazil’s production increase was more modest, increasing from 43.080k to 98.708k.

Currency Stabilization (as of 7/30/2020)

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Brazilian Real
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Mexican Peso

The Mexican peso and Brazilian real spent most of 2020 at historically low values, partially due to the global economic impact of the coronavirus. The currencies depreciated further in early July, but have since stabilized.

Economic News to Follow

Recent economic news points towards mixed economic and manufacturing activity across key regional markets.

Mexican Economy Shrinks Further in May

Mexico’s economy shrank another 2.6% in May from April after a record decline the previous month, official data showed on Friday, dimming the chances of a sharp rebound in activity from the economic destruction of the coronavirus pandemic. The economy contracted a record 22.7% compared with the same month last year, the biggest fall since modern records began in early 1993, according to figures put out by national statistics agency INEGI. In April, the economy shrank by 19.8% on the year.

Brazil Manufacturing Grows in June

Brazilian manufacturing expanded in June for the first time in four months, a survey of purchasing managers’ activity showed on Wednesday, coming back to life after three months in a state of near paralysis due to the COVID-19 crisis. The highest output and new orders since November last year helped propel IHS Markit’s headline Brazil manufacturing purchasing managers index (PMI) to 51.6 in June from 38.3 in May.

China’s Soybean Imports from Brazil Rise to Record in June

China’s soybean imports in June from top supplier Brazil soared to a record high, according to customs data released on Sunday, driven by growing demand for soybeans as China’s pig herd recovers after deadly outbreaks of African swine fever.

The world’s top soybean buyer brought in 10.51 million tonnes of the oilseed from the South American country in June, up 91% from 5.5 million tonnes in the previous year, data from the General Administration of Customs showed. The June figures were also up 18.6% from May imports from Brazil at 8.86 million tonnes.

Listen: Metals Trade Insights as Markets Emerge from Coronavirus Lockdown

China appears to be almost single-handedly supporting global metals prices on the back of a return to high levels of industrial activity. But other Asian markets are still slowly emerging from COVID-19 related lockdowns. How is this impacting iron ore, steel, coking coal, scrap and alumina demand and prices?

Julien Hall, director of Metals for APAC, S&P Global Platts, and Paul Bartholomew, head of metals news and insight, APAC, Platts, discuss key findings from the latest quarterly spot market trade reviews, and ponder the implications of these on the current quarter. Listen here.

Recommended Read: Three Implications of Coronavirus on Global Trade

The Covid-19 virus is severely affecting international trade, but what are the long-term implications on global trade? Three, in particular, stand out and forecast a challenging route.

This article from Forbes does an excellent job of outlining three primary implications of the global pandemic on trade.