- Mexico: Sales dropped in September, suggesting weakness in consumption
- Peru: Mining investment declined in September due to base effects
MEXICO: SALES DROPPED IN SEPTEMBER, SUGGESTING WEAKNESS IN CONSUMPTION
In September, retail and wholesale activity signaled a further contraction in consumption. Retail sales dropped for the fifth consecutive month, this time by -1.5% y/y (vs -1.2% expected, -0.8% previously). This decline was driven by significant decreases in hardware items (-6.4%), stationery, recreational items, and other personal use articles (-5.4%), as well as health-related items (-4.7%). On the other hand, retail sales through internet, printed catalogs, television, and similar channels increased by 16.1%. Moreover, wholesale trade sales plummeted by -13.5% y/y, continuing its declining trend since December 2023, owing to drops of -34.6% in brokerage and -20.1% in agricultural and forestry raw materials (chart 1). Looking ahead, the adverse and uncertain economic environment of the second half of the year has impacted new downward revisions to GDP forecasts for 2024 and 2025, as investments drop and job creation decelerates, resulting in stalling consumption, although still positive. Also, wholesale could remain in negative territory as companies reduce their inventories in face of moderating demand.
—Rodolfo Mitchell, Brian Pérez & Miguel Saldaña
PERU: MINING INVESTMENT DECLINED IN SEPTEMBER DUE TO BASE EFFECTS
Mining investment fell by 21.8% year-on-year (y/y) in September, but there was a monthly increase of 3.2%. The decline was mainly due to base effects from the increase in investment in the beneficiation plant sector in September 2023. Cumulative from January to September, investment rose 2.7% y/y (chart 2).
In September, the lower investment came from Antamina (-46.9% y/y) and Southern Peru (-1.6% y/y), who had increased their investment in their “Huincush” Beneficiation Plant and “Acumulación Aquiles 101” Beneficiation Plant, respectively, the previous year. On the other hand, Anglo American’s investment continued to decline (-84.7% y/y), after finishing its project Quellaveco. The mining companies that increased their investment were: Las Bambas (+51.3% y/y) due to the development of its Chalcobamba project (phase 1), Buenaventura (+36.2% y/y), and Chinalco (+57.1% y/y) due to the development of brownfield projects, and Cerro Verde (+10.8%) which continues to increase its investment following the approval of its technical report in early June (table 1).
Mining output increased 1.7% YoY in September but showed mixed results. Copper production decreased 1.2% y/y, with the largest declines recorded by Quellaveco (-21.2% y/y) and Marcobre (-22.7% y/y) due to lower ore grades reported in their quarterly results. Output also fell at Cerro Verde (-11% y/y), Antamina (-6.7% y/y), and Hudbay (-14% y/y). These companies represent 50% of the copper production. Zinc output continued falling (-15.0% y/y), marking six consecutive months of contraction due to a lower mineral ore grade. There were also small declines in the production of gold (0.3% y/y), lead (-1.0% y/y), and iron (-0.3% y/y).
On the positive side, silver output increased 14.7% y/y in the month, driven by Buenaventura’s significant growth (+422% y/y) due to its recent Yumpag project, which began production in March, and is expected to increase the production of its Uchucchacua mine significantly. Tin output by Minsur increased 7.8% y/y, attributed to higher ore grades. Molybdenum production increased 34.7% y/y, driven by high contributions from Southern Peru (+39.8% y/y) and Cerro Verde (+16.0% y/y), due to higher ore grades (table 2).
—Katherine Salazar
DISCLAIMER
This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank nor any of its officers, directors, partners, employees or affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.
These reports are provided to you for informational purposes only. This report is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any financial instrument, nor shall this report be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The information contained in this report is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a “call to action” or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. Scotiabank may engage in transactions in a manner inconsistent with the views discussed this report and may have positions, or be in the process of acquiring or disposing of positions, referred to in this report.
Scotiabank, its affiliates and any of their respective officers, directors and employees may from time to time take positions in currencies, act as managers, co-managers or underwriters of a public offering or act as principals or agents, deal in, own or act as market makers or advisors, brokers or commercial and/or investment bankers in relation to securities or related derivatives. As a result of these actions, Scotiabank may receive remuneration. All Scotiabank products and services are subject to the terms of applicable agreements and local regulations. Officers, directors and employees of Scotiabank and its affiliates may serve as directors of corporations.
Any securities discussed in this report may not be suitable for all investors. Scotiabank recommends that investors independently evaluate any issuer and security discussed in this report, and consult with any advisors they deem necessary prior to making any investment.
This report and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced without the prior express written consent of Scotiabank.
™ Trademark of The Bank of Nova Scotia. Used under license, where applicable.
Scotiabank, together with “Global Banking and Markets”, is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including; Scotiabank Europe plc; Scotiabank (Ireland) Designated Activity Company; Scotiabank Inverlat S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Derivados S.A. de C.V. – all members of the Scotiabank group and authorized users of the Scotiabank mark. The Bank of Nova Scotia is incorporated in Canada with limited liability and is authorised and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia's regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank Europe plc is authorized by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority.
Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V, Grupo Financiero Scotiabank Inverlat, and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities.
Not all products and services are offered in all jurisdictions. Services described are available in jurisdictions where permitted by law.