While the manufacturing sector continues to strengthen across Latin America, supply chain disruptions created by the COVID-19 pandemic are expected to persist through the end of 2021. High ocean freight rates – caused by ongoing container scarcity – and raw material shortages could create challenges in importing materials.

Leeco Trading has decades of experience in international trading and is ready to help customers source metals and fine chemicals during this difficult market. Contact our team today to receive a quote or learn more.

Brazil’s manufacturing PMI increased month-over-month in July to reach its highest level since February. Mexico’s manufacturing PMI also increased month-over-month in July, nearing the 50.0 level of no change in sector growth.

Capacity utilization increased month-over-month during June in both Brazil and Mexico as manufacturing output rose.

Below is a chart showing July 2021 import levels for Mexico, Brazil and Chile. Imports to each country sharply increased month-over-month.

Car production in Brazil fell 2% month-over-month in July, reaching the lowest level for a July month since 2003. Car production in Mexico decreased about 16% month-over-month in July as ongoing semiconductor chip shortages halted production.

Brazil’s annual inflation rate accelerated to 8.99% in July, in-line with market forecasts and marking the highest rate since May 2016. Mexico’s annual inflation rate eased to 5.81% in July but remained above the central banks 3% target range.

Leeco Trading’s Commercial Director, Antonio Rosset, shares his insights on how the COVID-19 pandemic has impacted the international trading market.

“While we are seeing demand for raw material imports skyrocket in Latin America, there are some lingering supply chain disruptions from the COVID-19 pandemic impacting manufacturers in the region, such as shipping container shortages and high freight rates. Leeco Trading is monitoring these ever-changing market conditions, and our team is geared to help customers internationally source the raw materials they need, when they need them.”

Antonio Rosset, Commercial Director

Recent economic news points towards stronger manufacturing outlooks in key Latin American countries, but supply chain disruptions persist.

Factories across parts of northern Mexico reported $2.7 billion in losses from rolling blackouts that impacted the region due to limited natural gas supplies from Texas, which was undergoing a rare winter freeze. While regions bordering the U.S. were the main locations impacted by blackouts, some regions further south were also forced to temporarily shut factories down.

According to economic research conducted by Fastmarkets, the COVID-19 pandemic caused Latin America to lose a decade of economic progress, as GDP levels at the start of 2021 fell to levels not seen since 2011. Higher public spending, higher global commodity prices, high unemployment levels and lower amounts of tourism have all negatively impacted major economies in the region, including Brazil, Mexico, Chile and Argentina.

To combat rising inflation, central banks in Brazil, Mexico, Peru and Chile have increased interest rates. When pandemic restrictions were lifted, pent up demand pushed prices for consumer goods – such as food – upwards, which therefore led to an increase in inflation. Experts say more rate increases can be expected in the near term, as inflation remains well-above central bank targets.

Container shipping rates continue to skyrocket, particularly from China to the U.S., as an accelerating number of COVID cases slow container turnaround time. As a result, experts have seen barge capacity shift to these routes and lower barge volume along other routes, which is placing upward pressure on shipping rates across the globe.