Ternium Expects Boost in Q3 Shipments

The Latin American steelmaker shipped 2.982 million net tons of steel in the second quarter. This was a sequential drop of 3% but an increase of 1% over the year-ago quarter.

In the second quarter, 68% of Ternium’s steel shipments were in Mexico, 19% in the Southern region (including Argentina), 6% in the US, 4% in Colombia, 1% in Brazil, and 2% elsewhere, according to a presentation made with the company’s earnings conference call.

Within Mexico, steel shipments of 2.031 million tons were up 21% over Q2’22 but down 2% from the previous quarter. Shipments to industrial customers were higher in the quarter, particularly to the home appliance and automotive sectors, Ternium said.

Continued strength in Mexico’s automotive and white-goods sectors are expected to boost Q3 shipments even higher, the company said in its Q2 earnings report.

“The plan is to ship at least 200,000 tons more. So, a 10% increase, roughly,” CEO Maximo Vedoya said on an earnings call on Wednesday, Aug. 2. He noted that although some of the supply constraints have been addressed, the supply chain remains “very, very tight.”

“Apparent steel demand remains healthy,” CFO Pablo Brizio said on the call. “For the time being, we have not seen any sign of recession in the North American market.”

Ternium said it gained market share in the Mexican flat steel market in the first half of the year, supported by its new facility in Pesquería, Nuevo Leon. It plans to continue increasing its market share.

Ternium’s 4.5-million-ton-per-year (tpy) hot strip mill in Pesquería began operations in 2021. In June, the company announced it will also build a $3.2 billion, 2.86-million-tpy EAF slab mill in Pesquería.

Construction of that project is expected to begin in December. It will be built adjacent to the $1 billion downstream facility currently under construction there, which will add a 1.5 million tpy pickling and tandem cold mill, a 500,000-tpy galvanizing line, and related finishing equipment.

All told, Luxembourg-based Ternium posted Q2 net income of $736 million – down 21% from the year-ago period. Q2 sales of $3.871 billion were 13% lower year on year.

Ternium announced in July that it had officially increased its share in Brazilian steelmaker Usiminas. Q3 will be the first quarter in which Usiminas’ financials will be included in Ternium’s earnings results. “As a result, Ternium’s consolidated third quarter of 2023 financial information will be materially different when compared to the second quarter of 2023,” Ternium said.

Ternium now holds a 23.3% stake in Usiminas. Beginning in the third quarter, its results will include the 76.7% economic participation in Usiminas that is not owned by Ternium’s shareholders.

Vedoya said the main opportunities they see in the Brazilian market are coming from nearshoring, import substitution, an energy transition, the aging of vehicles and agriculture machinery, and the need for infrastructure investment.

“All in all, Brazil has substantial opportunities to start growing consistently again under a new trend of industrialization, which should support an increased intensity in the use of steel,” he said.