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Ternium (TX)

Participants
Sebastian Marti Investor Relations and Compliance Director
Máximo Vedoya Chief Executive Officer
Pablo Brizzio Chief Financial Officer
Caio Greiner BTG Pactual
Carlos De Alba Morgan Stanley
Andreas Bokkenheuser UBS
Caio Ribeiro Credit Suisse
Thiago Lofiego Bradesco
Alfonso Salazar Scotiabank
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Ternium Second Quarter 2021 Results Conference Call. At this time all participants are in listen-only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions]. Also please be advised that today's conference is being recorded. Instructions]. [Operator like conference now speaker to hand Mr. today, to would over the your I Marti. Sebastian you. Thank ahead, go Please sir.

Sebastian Marti

am and Good presentation. us its XXXX. is I This today. and financial My Investor morning, thank second complementary name Sebastian you results for call Marti, quarter released is Director. Ternium Compliance for the joining Ternium's yesterday Relations of and that to

Ternium's Vedoya Ternium's Ternium's environment discuss Joining Officer, and a be Officer, Financial At are performance. remarks, conclusion business Brizzio; Chief our Chief me who Mr. the Máximo today Pablo Mr. Executive Q&A prepared session. will will and of there

Factors we call could contained are our like contains webcast Before results Page affect to filings conference and in Securities that, and today's over in with information on that presentation. implied. to that turn and actual this With those would Exchange I'll that I Mr. forward-looking call Vedoya. X from Commission may results remind begin, vary the you or the expressed

Máximo Vedoya

constraining you, quarter looking demand Thank levels reported Prices support the the solid current Steel high the our with over half. increased net are margins, downtrend. last environment are supply year. expect And to at chains, And our in from reason of this and The should on encouraging new downtrend market your XX with steel we continue probably successfully be production demand strong, Russia to begin low a China news believe of export. for limiting up over I the view with growing second steel rest and the XX, to We results a remarkable point started environment, call. region all at don't on a estimations. strong profound to mill our second objective in and steel Pesqueria some in this steadily the financial steel value performance from remains prices our positive recent EBITDA during main thanks today's strong months for the advance inventories record In export in May chains. participation global quarterly rebates Ternium previous year. income. that had very sales, a of Good I hot the steel going ahead, the of But rolling with the Sebastian. taxes monthly morning.

We and achievements than are with better ramp-up with which very these the is also of the line, doing pleased anticipated.

products As us our high expect on we of to of a of market XXX,XXX tons XXX,XXX tons the facility during second the new offering quality currently by this steel this, call. mentioned result from increase I approximately our enable to conference the year last half

level All should EBITDA of the third result higher this in XXXX. in of quarter subsequently

significant kept to second out yearly sheet On show the the continued a we debt side, dividend balance level generation, low quarter, May. and we after of paying our in net very in cash even

disruption, greatly by the end the The Mexico following gradually expect market second is affected demand supply is should this electrical go be auto a appliances having subside Manufacturing and Let record behind year industry consumption. market. turn main driver HVAC, very sales now. the like having Mexico, also we strong. to of is growth In steel me our motors the continues user in significant demand increasing Steel and over industrial situation expectations the it strong for the markets end demand, over their backlogs in semiconductor are half our industries but quarters. in household chain user

In from addition, industries. an are we Mexico in increase these manufacturing investment seeing announcement in

market this needs, the no one, this to investment more increase as more as the The and retail quarter quarter this Argentina domestic market markets steady second in in from market, automotive help product related from is industrial of not and Mexico higher participation is a facility the growth construction we materials currently strong is after commercial significant industrial in such strong seeing towards relatively year. with softer industrial in our activity the us construction. some the mill As shipments our demand to sectors Mexico, infrastructure, new hot of in even sustained in In third agribusiness. and to we over going ramp-up remain time. rolling activity levels In as building expect are demand geared

of the market. Also level On November, continue in the to introduce be in which a environment there in could macroeconomic hand, mid-terms the in country Argentina, the unstable. are uncertainty higher other inaction

Turning now market the other regions. to

continue our Mexico in facilities offsetting in anticipated These Brazil volume lower third-party in As Mexico sold the in mill a quarter, in slab of Argentina. in and to previous and our slabs we our conference the sold resulted integrate shipments of Southern to finished call, Region. products highest with the

was rolling which [indiscernible] to concur mix requiring the You an now decrease quarter, for is to is in in during slabs start-up in expired. contract of the reason of One with quarter. long-term volume increasing mill a timed continue can the with that the expect slab second up. our see third the our this supply to Mexico, This had facility we sales slab ramp of participation Alabama to during new hot

affecting worth widespread is not that Before is which variant, the America. hemisphere South Delta is in finishing now Northern my the mentioning remarks. COVID-XX It

So months. its significantly programs following region Vaccination we in improved the market have have the last month. impact the in see yet over to over our

Although the population the percentage Europe with vaccination is full yet it as as the not or high in of U.S. is

Ternium's Also, value encourage of actions sustainable like we the the to to attention point achieve it Concluding, report, our the showing solid further a issued continue should six to June. achieving describing sanitary progress objectives we business in goals it. over to in they our go towards people, soften strong to in a It of review performance I And worsens. in during be continues remaining with sustainability way, at you With taken your second decarbonization, some I our So a and the year. the began to areas, environment if fundamentals Pablo to the shows last during call of publication chains situation if would our steel chain performance lockdowns risk or steel disruption global ahead of Even favorable the quarters safety, high prices. as presentation community, expect value the following quarter. please support and strategy. webcast there this industry the a

Pablo Brizzio

prevailing everybody. that in to morning Máximo good has been the steel of year and half It conditions Máximo has remarkable. performance the first varied the Ternium's reflects in market the described. just certainly Thanks,

from company of level profitability quarter second first in results the new of to now see will after grow a performance condition record the strong and We the this year. quarter in the very

earnings XX% ton EBITDA and presentation. in of level. record These or our on the the Page per probably X reviewing than an EBITDA high. Let's of EBITDA in peers quarter $XXX levels of second margin billion, at webcast world the most $X.X start by a reached of those the net margin year higher new are

reached or the Ternium Although there million, going to this cycle. not point the higher the period margins saw per in over out ADS. I that of and something over $X.XX consistently order margins out cycle, its $X.X income Net peers, the among distinguishes sustained to is are wanted be

Looking with this analyze EBITDA and on. volumes, third higher we in margins achieve the details will and we out record to later quarter, more to new expect

review X Page second we to this steel in volumes now see the of year. and turn we When a a the Southern on recovery Let's shipments. Region year-over-year quarter our to compare significant basis Mexico in

second quarter year, outbreak. last know, deeply by activity the you affected COVID-XX the As levels were

demand Region Southern Now Ternium's second markets. the and on steel quarter elevated X% a a sequential basis, of shipments main the scenario the remaining increased levels strong year, in of Mexico in at in in

our ordering for increase in third and the shipments of approximately total to a facility [indiscernible] grade considering demand Ternium's in with slabs shipped reduction already and mentioned. Ternium forward, tons industrial see in rolling region Máximo products ramp-up we company's Brazil other U.S. slab hot of The reflects the market in strong the in Mexico can parties region, In will Pesqueria, as of of mill the to integration the low increase system. that steel by XXX,XXX quarter-after-quarter. Looking the increase new continue the the you believe

to this we third the reduction a volume We less expect shipped of integration remain in result, the to quarter. And as further trend expect third-parties.

Okay, now have basis. we higher see developments, of combining page, tons in can these sequentially on the steel million and the a quarter on second year, relatively year-over-year consolidated of shipments X.X next you the XX% stable

in second Ternium with anticipate in prices. per Ternium's of realized revenue the a a in in increased the large ton This Moving quarter. together year-over-year sequentially Mexico the in prices price contract basis. reset and quarter third on increase a further steel to

increase a $X.X Compared the quarter chart, left shipments now the realized in to in the the and in second higher last than in bottom sales billion. the the net sequential more price of net resulted to quarter doubled. stable second in sales year quarter sales net second of Turning combination to XX%

increase partially ton Let's chart realized purchase that raw higher as now and mainly which net were income shows and The on a increased offset of slab on EBITDA per result material prices X, higher main a sequential second maintenance we top cost in review driver the had Page higher quarter. price, and by on EBITDA in higher the the mainly expenses.

expected increase of a in this in mentioned ton sequential third expect the reflecting and ton. offset As at increases per in start higher cost shipments the by I presentation, per revenue we partially quarter EBITDA new

below of income in mostly the in the the higher chart operating company's raw income. sequential materials to flow shows inventories. the second the to continue price that the quarter In increase was through increase purchase due in As left

improved. own results addition, operation our from Usiminas in In

the months year expect to see the of was already to of In In $XXX the further higher we On quarter. have the million, in for costs year. Page on the of net capital. second increase let expected now review the presentation, as increase operations reflecting anticipated the drivers X increase The capital, page, of second in same working flow realized after finish the sheet EBITDA this our previously we prices flow balance quarter Cash quarter in increase discussed. first and six following working significant performance. as me a just changes but steel we same third and the even cash for in quarterly the the that income turn both charts, the were described can

total of cash billion remarks. prepared Ternium free just company EBITDA. to $XXX after paying the at million. $XXX after May to flow, the the X.X million quarter, June, With $X.XX $X.X reduce a XX stands Regarding last concluding net debt debt times which in of out equivalent slightly end in capital my $XXX dividend generated at months expenditure the annual million for amount to Net I'm debt a of that enabled

your time might with we are for much any have. session. operator take very Please to and attention. questions you you Q&A And thank So now ready proceed the

Operator

[Operator Instructions].

BTG question from Your Caio Greiner line first the Pactual. from comes of

Your line is open.

Caio Greiner

Good afternoon. thank you. Hi,

So first is capital I investment mean, the this probably on main question question allocation. surrounding case. my the

growth? to that That's geographical but electric invest in or Mexico, priorities you And Would to not to time EAS or go is extraordinary per being sure another as meantime, same years? - closer failure does Pesqueria? project how would rather Ternium currently most Nowadays, willing do understand as are to off were is moving you if some priority of not if on furnace the think would ramping organic on question where Mexico, because maybe project be question. the to company coming Because maybe to on Ternium see willing we off equation would hand, second an remember talks versus you you be see matter you or And we ramp-up if diversification? is do official for the first maybe my the speaking investing net second where that, option still thinking of the you you in is an the kick still already up M&A on we about could and approved, quick generation? in Could half to with in And we company dividends the in that do is Pesqueria, the are. today? just wanted And some you policy a that the feasible if likely one growth that based I company still dividends building company's a we're of be being a cash, ton. company? maybe What another weeks. the were What or flow so dividend there at the you're over time, see free kick really ago, or case EBITDA in my seeing cash the operate,

above per EBITDA could above ton per be levels that third ton in second the quarter. per quarter, $XXX delivered the potentially Ternium ton in So $XXX

at do normalizing of So you probably seen quarters I EBITDA where wanted do understand few having just a I EBITDA see wanted just to very that the sustainable now that you XX% EBITDA normalizing quickly to to you much. ahead, margins, range. understand could were remember see normalizing ago, because reasons believe speaking be levels. or Thank you margins those long-term I if XX% And to at

Máximo Vedoya

you Pablo second one. very will question, much, Caio. first I Thank take then the probably the will answer and

to this the organic a question allocation, growth, let to answer of geographical about, our the first there's Caio. try things question, make summary lot a capital are the the of try So question, in what first and diversification, thoughts me the

strong net we're balance next that's in and a negative quarter, You're sheet be right, significant debt to have probably going true. we

million. more highest history, quarter that did that dividends I dividend remind was year a was of in invest before in half the in no considering this invest billion approved around is million we probably $XXX we projects, million, it debt highest third this capital half, going this. $XXX around what the let's that capital the we're of of the mean, little to in all in CapEx in pay really dividend Ternium's $XXX pay investing continuing quarter $X.X the the May almost bit we're this and to the in we working doubling of second So to first In we

in to And as And forward looking an different in XXXX issue be which new our a approved we again, that and an for not also, the or to business will the board even Americas, and do with think current opportunities, out region. going our of other that level increase investment are forward, it's geographical I'm clearly again, don't business this this it Again, least have these opportunity the rolling the to participation the the will for in of mean, rule into environment February, today far onwards, year. hot upstream That's in USMCA we the this an you something for us expand having conference, Directors of our Ternium in new is is see a the And not the ramp-up growth, in provide I propose. the help looking today to these steel future. analyzing of road. can some regarding our ruling the mind American downstream we're CapEx concentrating I we're dividends, and dividend that I the huge probably region can't said that as diversification, and in as away that ours is dividends. sustained are open more down new organic as is should optimistic point extraordinary regions or in always past, Mexico proposed capacity supporting investment sure. said rules I we're level will believe projects grow by I we're something the opportunity we're of I strict it in mill then that probably as in Board capacity continent. extraordinary said, that markets But require other analyzing us, but mentioned not out. the I at mentioned you I So not we to at dividend, doing opportunity, the mean we pay that this But that once dividends, new dividends

cover those your that Caio? everything question, with in we're hope projects of I analyzing. all first that So I this, are

Pablo Brizzio

is third next of the has me are like, quarter that quarter Okay, for pointing important per are margin the we the mention, both the take the we not it's it's also that second perspective see one. in part are second generate prices to how the that coming important view after into So you? out mention ton quarters by Caio's per right year. the the company the EBITDA myself made that question hey, a for and Máximo rapid let expecting or ton Also, reduction per and comments, in significant the with ton stressed to the higher EBITDA of to $XXX and Máximo the also in

even reduction numbers. So on reasonable though EBITDA it's believe will not that level significant pattern expecting to margins, see a sustain or of EBITDA this to not also these we're

as that mentioned work continue opening said, company of and levels continue remarks run, of achieve the side not the keep sustain to which the to to have of the per Ternium long or EBITDA we worked work high any feature part we this margins that the it's EBITDA we but we very that have. the peers and to have of been On the to is something we to that our hard and continue in the cycle, is outperform the in been also very has achieve upper in to we something able always role only is to that part lower always ton cycle,

that the these that. we And to this more sustain, XX% upper environment, higher always we margin goals. we mill normal between will but a every easy analyzing at the are something in toward say continue working of So market something only new range this that point even to especially can that probably easily the XX% side to everything range that of investment or made, we'll is that is to overpass, is be not be the this than and

as to the of easy sustain is that clearly, increase with So much will But work achieve. to we something the fast something and we will performance the can as closer probably company. to clearly next is we that year probably is we being in as sustained XX% this

Caio Greiner

Thank you very gentlemen. much

Pablo Brizzio

welcome. You're

Operator

next line Your from De Alba of comes Morgan from question Carlos the Stanley.

Your open. line is

Carlos De Alba

you're morning fine. I good Hello, Hopefully, A if gentlemen. questions, of may. doing couple

a you little and And in give customers much said bit overall of so sell how Máximo, company's volumes about that you the talking the could idea increase, to us about the just the in to percentage much how will the you talking shipment? are tons XXX,XXX field an of in you value-added quarters, So internally great. coming from external Mexico be internally you when if lab of or expect second, volume is overall

Máximo Vedoya

year, thanks for hope And Carlos. our And the of half you, is the quarter, remember to cost coming conference XXX,XXX sales. that fine. Thank new we overall need to the in if going XXX,XXX I second facility. updated because you in ramp-up what's tons, curve, tons. last you from I XXX,XXX too, the That's doing of all the asking, second we this have increase we tons are in the call, the told

So how in the new much are volume from we putting market. the facility

slabs. The if remember second the part, I

in third-parties around in slabs the going third tons is to quarter XXX,XXX Mexico be that XXX,XXX and be quarter the range. going around and XXX,XXX mean, probably XXX,XXX the tons. tons going Okay, to it's it's to to be to I tons between to

to be no second from, in decreasing quarter. bit the going I do what it's So less think we of was XXX, little

Carlos De Alba

in All right, or final U.S., Canada in Mexico? with rules only to needing then talk when consider potentially the invest rules steelmaking the fair you and MCA USMCA and capacity just question, about enough. And to when you comply order the

Máximo Vedoya

specific very Carlos. question, a That's

said, we what we announcement doing are to I customers are mean, in part roll our I have there. of that and have Mexico. mill our as probably is don't mean, there hot do that to think is probably make analyzing, we it is I I any

least is are that to industry we're So for XXXX. they this are the this in to Again, origins make announcement, automotive and USMCA part something of Mexico. not sense rule analyzing start an the going remember it of makes at is in

So that's we have and what to analyze alternatives are Carlos. time we all doing, the

Carlos De Alba

point option considering the ore Fair hand on enough, on and the basis, to I DRI mean in process. on have Is in that be iron furnace integrated pellets you that reduce emissions EAF you pressures this guys might Mexico, say there this this blast one at but steelmaking and and for carbon fact it to than are is all this facility? fair the enormous hypothetical basis, hypothetical better time, a in

Máximo Vedoya

that's blast No, I not sure. That's you. furnace, We're tell for a can analyzing sure. for that

Carlos De Alba

best. Fair enough, much. the very thank you All

Máximo Vedoya

you. Thank

Operator

comes UBS. next from Your the question from of Andreas Bokkenheuser line

Your open. line is

Andreas Bokkenheuser

safe Thank exports to well. and and you on hope demand for Couple questions very much. quick Pesqueria. of your I you're strategy pertaining all

strong, an in so steel side getting We've Mexico. demand, it's I on Mexican amount domestic on for is has flat demand of mentioned think firstly solid. quite the Just actually calls you demand that that weaker suggesting increasing been been been

or bit I'm the what that could you just demand market because the a question? get domestic actually to talk seeing is is capturing about So share, strong domestic players be if of demand Mexico you of market sense that high could you see yourself of despite happening or from either trying kind my pretty end a in course, what's first seeing capturing you moment so share, there you're strong at that price little imports,

Máximo Vedoya

where Andreas. one, consumption as you, demand little it is mean, bit Mexico to will to to I increasing at increasing XX% steel Mexico But not a increasing around year, of in both the is is Thank or XXXX. be in is seeing compared we take increasing close Brazil, more it's increasing last to I in XXXX, are consumption as much the that compared going power U.S., honest. more. in

business. side of is industrial the with the the commercial commercial not the products the it's long So it's which the market, And or increasing, that decreasing, invested are improving different what as part you're markets, demand sorry much market, products, the flat very much but very it's part of flat industrial as is very is between right the and that we also in strong.

is bit again imports. gaining clearly, shares we're above and a little there market So some

Andreas Bokkenheuser

follow-up Maybe sense. quick a there. That makes

of front in demand last if have So versus numbers is? you know where have year we the are do you, don't a I this sense XXXX, in pre-COVID obviously from year, mentioned where you of you

Máximo Vedoya

same. think the little year, last last to I year probably decrease mean around XX%, around exact cash flow want But of this in we're be the But X% X%. number. have consumption the I here. more. I apparent don't an I to bit And seeing almost increase the year, side It's a

the products, much it's the the construction a is but XXXX, than commercial So little XXXX Andreas, same. lower. more, with to higher demand Again almost bit difference, products XXXX, industrial same site, flat it's almost for

So size. they are in the different market

Andreas Bokkenheuser

that's you question the Yes, little of mix second you terms in lot very we've then envisioning demand. just not bit, basically I different seen a might as U.S. clear. an Pesqueria, how question know are shipments on in the easy the how of ramp-up of capacity just been a clear, and be a going product demand my but U.S. down which That's And up be lot, seems are fuel kind with to go. and you more driven those supply envisioning price driven having kind of answer, mean, where to will I shut obviously it's

Pesqueria shipments? into the yourself that than the those mean more How see exporting market or see that see from capturing do into you you Pesqueria you coming yourself from those, U.S.? imports where or do you have more do Mexico does from see U.S. So proportionately before share you

Máximo Vedoya

pre-COVID But utilization driven driven agree the a honest more today, producing the there very I good that's U.S. to the be sure supply honest, that you restrictions to I is at I am agree that's in levels. more. some and some And are be with Andreas the probably is down. is Mexico Yes, U.S., than demand capacity that if not price question.

going producing demand in - in XX% the So still I months but grow is for than an the again, increase in huge from less than no it's three U.S. America demand. U.S. up today, ago, mean, COVID we year past. probably is U.S. six to the it's it's a levels not be, are number. also And probably going to more seeing this

industries mean, seeing And in seeing happening, going different are it's in difficult, by we USMCA a things, investments also that time, more are by again, So, USMCA. steel which a lot of are issues. driven probably range that clearly investing consumes but the chains we reshoring these driven I people of are supply we're to driven some fact seeing getting that huge that demand but driven take is the

a steel So Remember consume region or imports imports indirect steel is to we are much that a final going import of than imports from are demand high products is bigger and increase. lot is of take but very this but of steel are changing. from in the to trend changing. the It's going the it important seeing steel that time, that

So imports our the for going this. for to going, comes coming new moment it's go substitute the facility in that right just is to times go mainly so I think it's to us, Again, mainly and the these worry new going that to volume is demand Mexico, from investments.

increase lot imports. of in mainly, see it's for be the again the And And demand a Mexico some there. part U.S. space and going can be the and But to export for we

Andreas Bokkenheuser

I XX%. those know flat for in we the that that XX% make of rig for U.S., steel production dominant and probably the would two think I auto autos, demand flat very because flat almost at steel down of count steel demand energy, account I U.S. probably about Okay, just down we U.S. look because that's the clear. is And in being would of side mean, drivers argument that is the make, is the on we energy the the I know just down the in semiconductors. if

we like it from XXXX is that in U.S. what steel see. the that lower still demand if up And looks it than put together, are production So pre-COVID that is it down looks we because imports

of stock tons that's which basis seeing is X,XXX, guess the $XXX right potential price. So question. the my We're I now current below

that but So significant to I it's you some think, we're weakness the going in going short-term? probably agree not I to be see with weakness,

Máximo Vedoya

increasing, than gas is And some a parts. is going to right. I is mean, imports, to numbers. what apparent or you're clearly according aggressive a we going and producers again, are in now XXXX. don't consume I - the is more I don't and the I is going Imports, oil right steel And going to mean, consumption you're course, XX%, demand to know our U.S. about I pre also. against and Yes, but increase general XXXX huge issue. again, this more it's XXXX mean, return to XXXX of U.S. on most return of in demand again, - think to

course. of So it's a I combination think

Andreas Bokkenheuser

That's a session, want final one good point. up. Q&A I to monopolize the maybe follow don't

Máximo Vedoya

Don't worry.

Andreas Bokkenheuser

XXXX that continues of seeing in into XXXX. in lot think we're a Because you demand from XXXX? Do pent-up demand obviously was lost that

into into got got more demand XXXX does XXXX or to pushed that we're in that Does estimates, XXXX see lost your what think you in growth your do analysis? XXXX? XXXX going stabilize? in versus In So continue

Máximo Vedoya

if in what we No, are increase U.S. about mean, GDP in very yes. think, to Canada, the Again, even there I yes, you only market prospect the are and of there I the point Mexico, increases. the XXXX, thinking are huge I they the is view. market, mean, is XXXX, look economically good or not

I world. probably rebates, the help an mean something North Russia as signals which inputs to most I overcapacity bit these. exports are is export are of by are increase the that export. mean, going those thinking mean, that to continue. I all the considering and end to of issue, region. thing And that. going they're parts mean, are U.S. finally about and there are to in to in the demand going So trend Those things the I of going likely decreasing increasing, the is is continue cyclical, I huge I going year, think putting they China think But It's continue the the a in the trying whole so the little China is, to do about a doing. all of American

Andreas Bokkenheuser

insights taken That's fair Q&A this. on your very the appreciate than share clear, I my I've And of more session.

So you thank much. very

Máximo Vedoya

Okay, thank you, Andreas.

Operator

question comes from Suisse. next Credit Your the line Ribeiro of from Caio

Your line is open.

Caio Ribeiro

the morning, good Thank opportunity. everyone. Yes, you for

the throughout visibility now. demand could a estimates infrastructure have more it the first on So is on their the that package duration. companies my the question already U.S. for generate in lot And its provided a components There steel is different on few

generate your million already that what's they generate an in market generation get flat expected XXXX just prices U.S. supply package you secondly, up for a that, million the We have wanted estimate could the capacity you for in tons the as And if additional whole. for the So momentum. to could estimate on on add this I additions, additions XXXX. on kind are of on to could X X just supply wanted what perspective to I pricing then in that of ask demand steel or

market you growth that oversupply will pricing these could additions? So see see I more with you become think Do that it? momentum. than you just do supply to think demand Or Thank the wanted how impact absorbing you.

Máximo Vedoya

you, Thank Caio.

don't a first To infrastructure I They clearly said estimate I different about industries that know U.S. more question U.S. the in be have than honest, do. in have the The the what steel that

I'm to going number. So not change that

But is know, market as Our for clearly, main some very to Steel - of not is supply we compete and this a be to that to of issue in I are affect it's Mexico. here to honest. a we exports lot going us, not the participating be mean, with that to something Mexico seeing going producer them. good to And is, we lot or are their because U.S. ability you

ship U.S. very to expecting So lot we projects. for us, is these although are good, to it not to a the

or prices, because coming. don't oversupply, thing of is affiliate increased it's that you're of right, huge tons and driver capacity prices as the X capacity. a of But coming million these down And around I see this. Second is

X imports the depending you the than U.S. American As in around X, XX galvanized if tons X, North are million much X you or In X also. million I are mean, million tons. know, more products Mexico, tons. put there million than in higher

huge So as inputs which amount there faster region, a than demand think much lower is is of second, extra I coming the than what And is we growing told to capacity before, I that. be thought.

ours, other but going likely Again, very a the coming all is I So it's think saying the most capacity. not to only that. absorbed competitive be capacity, without

of will seeing at markets are not shows some Probably not So old some are the that slowing probably capacity. that demand down. market Those close. right the capacity I'm end, or But doesn't the sign now. the that of react closing

Caio Ribeiro

you, Thank clear. very That's Perfect. Máximo.

Máximo Vedoya

welcome. You're

Operator

the line Thiago of comes question next Your Lofiego, Bradesco. from

Your line is open.

Thiago Lofiego

discussion the that pricing Thank you, Andrea. back to you Two with questions. Máximo. One, had

steel the as trade seeing normal old the your drivers of level normal? more and be for of think the Just a well. that a new question theoretical What versus new view higher to that you seeing you're would we bit here. a prices in Right. And at changes are I maybe right? being normal, mentioned already a

is if say a pricing exporting see you acting let's changing for how But $X,XXX in is is dropping the ton. defend scenario way the for per the market, we it would be in potentially going U.S. even to steel still Right. China steel, less. longer pricing global higher XX% So

way above levels. normal that's So

near per So third higher XXX question, the mentioned confirm, to to the And of DML lab, Is parties part after the mill XXX,XXX news level how up you. of would will tons understand ramped or the the program of then Pesqueria you quarter. that the fully scenario? the new just term longer Thank is that for level to new to very shipments after just in normal defend the you second interesting. what be lab

Máximo Vedoya

mean ship Most that pricing new Perfect, facility a are four million is question buy which And to a point of go second, the times Thiago. then parties to more, I third doesn't more out some reach I the will a the Brazil we for Thiago, produce mean going those it's I and new started tons don't sales Pesqueria so to to probably rolling Semina, is I easy. today. to parties. bit Brazil times mill third going mind. should in slack if we thank party. with third before more think in three a going But to you, are XXXX as doing from be you that little in year, be to normal

going are we going the this. for foreseeing Brazilian how clubs So year. to That's we sell party and more some third fiscal to we market, the buy to slabs from are are

if course Of market change that will change also.

discussion, parts Regarding as first be don't level you number, new going the that - I to for a there's normal a right, said, think I very I think that seems I drivers? the the overcapacity, there very industry the world is but I mean, have in steel or putting if one that some various invest and sure. logical prices. we to industry much is. enormous in should a see reasons. put is And One capacity to new those investment investment, mean want are break I steel What aggressive. those China supporting is But government are to two number, what decarbonization. capacity. you're which new or a the replace the China don't drivers. are for steel is the capacity in other it right you want I of of amount your are mean for or targets in one now. of of or

to products idle some going going going are forever these investment, So capacity trends. stay to but be is it's of stay old idle. to And because some

there's higher on be and thing the little I for demand of raw the bit also to now things that The to North the region second of more, specific probably. going prices scrap, when material of going And one probably is mean, going increasing are material, demand, a we said. I in and American something depend and more continue more to region raw are

want new they So be a that number going to normal, hired. at are in prices those normal friends see a are the future. put things but are be new trend a that of to I to going I don't

Thiago Lofiego

I Máximo, Okay, they're you. you, with Thank agree clear.

Máximo Vedoya

Thank you. Thiago.

Operator

you. Thank

comes Salazar, from the Alfonso Your of question Scotiabank. line next

line open. is Your

Alfonso Salazar

two Thank you, I have questions. Pablo. and Máximo

or first more the you we time, the analyzing situation related related at the to to Michoacan in the also about violence lot in plans platform operation also is mentioned your and region what is plan, that can you of give not And Mexico. just about the question the a us your The you hear mine in the there, some and on was located. moment mining where one updates for are

can So well. you on if as us that give an update

investment for some The that matrix Wall four eventually importer software case Street operations In export implementing South of second South this relations. seeing for And because there hear year this. American they America, regarding our is net in operations. justice become to is patients what China the the is apparently wants the in countries these

Máximo Vedoya

Thank you, so mining operation mining found at in are of I update I capacity. the full mean the Mexico producing operation, the

volume. parties, of our although to As some third pellet of you we the extra But not know, own what facility, we rehab. are goes to it's huge of exporting produce most a selling or

as in about question this other working We know it To Michoacan the honest, is. south parts Mexico. and violence continue of of your is be expect that I

that of any region. our seeing not are We in

it's our the you from things Although, very in Michoacan mining news. one far read this border, away Colima so of the is the in operation near is

the Brazilian as this South of I in are in American Brazil operation from is for China, today and I market the is them first benefit - is and are example, mean, China. think - increasing, from most in order, the imports Brazil. remember, first coming mean the some you China know, I importing

the be to more us ship market So because I our market new I share don't their some that has Brazil, for and there industry, I is of the for focused it policy to in countries. export of changing of be China business to Brazil yet increase policy capacity that today to honest, example, the case, exports this don't market the some I going in China. meet going think to to Brazil, Brazilian benefit new on think steel increase is so are our to more to case the and can steel industry this still see regional see operations

Alfonso Salazar

see smaller you marginal expansions other an Okay, for or investment Do case countries what expansions like Colombia. in that? about

Máximo Vedoya

We that. are not analyzing

a analyzing trend in this a have changes, we Barranquilla. Today, are the future don't facility case him making to we As for Colombia. up is new are again, you know, mind Colombia, have up. a that near Today, are don't But we in ramping yet. the investment there that project new if in we in things and ramp in there

Alfonso Salazar

you Fair much, Máximo. enough. Thank very

Máximo Vedoya

You're welcome, Alfonso.

Operator

this There are time. more no at Instructions]. [Operator questions

Turning the call to over back Máximo Mr. Vedoya.

Máximo Vedoya

And additional again, touch question. please Okay, day comments a and much lot. or thank us contact have Thanks nice thank any very call. today our for you if a very And you participating please in conference much. in keep safe. you your stay for Have all and question,

Operator

call. today's for concludes participation. Ladies and this Thank your gentlemen, conference you

now You disconnect. may