SMU Interviews Ternium Mexico CEO

Mr. Jimenez explained the total Mexican market is about 15 million metric tons (16.5 net tons). About half of the Mexican market is supported by imported tons as there is not enough capacity amongst the Mexican mills. There are also a number of issues due to qualities and grades being requested by the domestic customers, especially in the automotive markets.

There are a number of new rolling mills coming onstream in Mexico over the next couple of years.

The Ternium Mexico CEO told me ArcelorMittal has a hot strip mill coming onstream in the first half 2020 that will produce about 2.5 million metric tons of hot rolled coil. This material will be focused on the industrial and construction markets.

AHMSA is revamping their hot rolled, cold rolled and tin plate facilities adding 1.2 million metric tons of HRC, 1.2 million metric tons of CRC and 300,000 metric tons of tin plate.

Deacero has a 500,000 metric ton Castrip mill focused on construction products.

Nucor joint venture mill is building 400,000 metric ton galvanizing mill focused on automotive applications.

Galvasid is adding 300,000 metric tons of galvanized and 200,000 metric tons of prepainted steel capacity.

Ternium has made the biggest investment and is in the process of adding the following capacities:

• 120,000 metric tons of new prepaint capacity which will be coming online during the 1st Half 2019
• 350,000 metric tons of new galvanizing capacity coming online 2nd Half 2019
• 4,100,000 metric ton hot strip mill scheduled for 2020. The HSM will be 76” wide and will roll 1” thick through 18 gauge.

Combined with slab supply out of Ternium Mexico (former ThyssenKrupp CSA slab mill,) the new production facilities at Ternium Mexico will be able to produce all of the Advanced High Strength and other grades needed by the automotive, energy, industrial and construction markets.

Over-Supply?

SMU asked Mr. Jimenez if there was room for all of the new capacity being built, especially with the possibility SDI will build their mill in Texas and Big River Steel may build another mill in Texas as well. “There will be room,” he said. Jimenez explained that by the year 2030 only 25 percent of the Mexican market will be based on foreign steel. “Mexico is becoming self-sufficient. Now we [Ternium] can produce any product for any customer. We [Ternium] want to be everyone’s supplier.”

He told us that the Mexican steel market is growing each and every year. There are three more automotive plants coming to Mexico over the next couple of years: BMW, Toyota and Compass (a Nissan/Daimler joint venture). The combination of these plants will add another 3.9 new units to the Mexican automotive production numbers.

Jimenez told SMU, “There will be space for all of us.”     

USMCA and Section 232

“Mexico does not represent a threat to the United States. Exports to the U.S. are less than what the U.S. exports to Mexico. [Section 232] is creating problems for the supply chain.” He went on to say, “Twenty-five percent [tariffs] makes OEM’s forced to take products or production from U.S. to Asia or the EU.”

He went on to say, “The real problem is over-capacity in China.”

Jimenez told SMU the USMCA is a good thing for the region (USA, Canada and Mexico). He told us the new local content provisions are very good for the steel industry.

He told us the new world order is going to be “Your region against my region” as Europe, Asia, USMCA and other market segments band together to create stronger synergies and markets.

Mexico does not want any quotas. They want the free flow of material across the border. The amount of tonnage moving in both directions “…is not a problem.”

Steel Market Update will focus on the new capacities being brought online by SDI, Nucor, JSW USA and Ternium at our 2019 SMU Steel Summit Conference, August 26-28. Cesar Jimenez has graciously accepted our invitation to join Mark Millett (CEO SDI), John Hritz (CEO JSW USA) and Ladd Hall (Executive Vice President, Flat Rolled for Nucor) on a mill panel to discuss their new capacity and business conditions.