Consumer durables is a cataloguing of consumer goods that are not essential to be bought very often as they are fashioned in a way so as to last for an extended period of time. Profits in the consumer durables sector were most profoundly…
BMI View: The launch of a new long-term energy auction and the announcement of tenders for power
transmission projects underscore our view that the Mexican power market will offer multiple business
opportunities over the coming years. These developments, coupled with Mexico's robust macroeconomic
prospects and government plans for significant investment in the industry, continue to support our positive
outlook for the Mexican power sector - with natural gas and renewables to outperform.
Latest Updates And Structural Trends
? In May 2016, the Mexican government (via the agency managing the wholesale power market, Cenace)
issued a tender for a second long-term energy and capacity auction, which is scheduled to be concluded
in September 2016. Similarly to the auction held in March 2016, Cenace will sign long-term power
purchase agreements (PPAs) with the auction's winners, and clean energy certiticates (CELs) will also be
? In July 2016, it was reported that 87 companies plus productive state enterprise Comisión Federal de
Electricidad (CFE) have expressed interest in participating in the auction. Also in July, the Mexican
government signed 18 long-term power generation contracts with the 11 companies that had presented
the winning bids at the first auction in April.
? In July 2016 the CFE announced that electricity tariffs for industrial, residential and commercial clients
would rise in the month of July - the first time electricity prices head higher in more than one year. The
CFE blamed the expected hike on an increase in the price of natural gas and fuel oil compared to the
previous month. While Henry Hub and WTI prices rose in June, we think that the MXN sell-off in Q2
2016 exacerbated the impact on the cost of generating electricity via higher import expenses for the CFE
- given Mexico's high reliance on natural gas imports from the US.