Ternium Sees Falling Steel Prices Impacting Q3 Results

The current “significant” declines in steel prices are due to the normalization of the global steel market after Russia’s invasion of Ukraine in February of this year. They are also the result of increasing inflation, monetary tightening in the Western economies, as well as Covid-related lockdowns in China, the Latin American steelmaker said in commentary released with earnings data.

Industrial demand remains healthy in Mexico despite the continuation of supply chain disruptions continuing to suppress automotive demand. Destocking within the commercial market is causing “lackluster demand,” the company noted.

While steel shipments rose sequentially within Mexico and Latin America, Q2 shipments to other markets, which include the US, were down 14%. Total steel shipments to all regions, totaling 2.96 million tons, were down 4% from Q2 2021.

All told, Ternium recorded net income of $936 million in the second quarter, down 19% from $1.16 billion in the second quarter of last year despite sales rising 13% to $4.44 billion over the same period.

Ternium’s new, 4.5-million-ton-per-year hot rolling mill in Pesquería, Mexico, was started up last year, and the company is investing an additional $1 billion to build a pickling line and tandem cold mill with a capacity of 1.5 million tons per year, a 500,000-tpy galvanizing line, and related finishing equipment.

Ternium has previously said that it is considering building a US-Mexico-Canada (USMCA) compliant greenfield EAF facility, with an announcement expected this year or next.

Updates on these projects could be discussed on Ternium’s earnings conference call on Wednesday, August 3.

Ternium has operations in Mexico, Brazil, Argentina, Colombia, Guatemala, and Shreveport, La., in the US.

By Laura Miller, Laura@SteelMarketUpdate.com