Ternium Q2 Profits Soar, New Mill Increases Output

“Realized steel prices in the third quarter are expected to continue increasing in all regions, partially offset by higher cost per ton due to higher raw material costs,” the company said in outlook commentary released with earnings data on Tuesday, Aug. 3.

On the operations side, Ternium forecasts that its new hot strip mill at its industrial center in Pesquería, Mexico, will ship roughly 660,000 short tons (600,000 metric tonnes) to the market over the balance of the year.

The new mill, also known as #4 Pesqueria, sports nameplate capacity of 4.4 million tons per year and has been gradually ramping up since producing its first coils in May.

All told, Ternium reported a profit of $1.16 billion in the second quarter of 2021 compared to net income of only $43.6 million in the second quarter of last year on net sales which more than doubled to $3.92 billion.

Overall shipments were 3.38 million tons in the second quarter of this year, up 25% from 2.70 million in the same quarter last year.

The gains were more pronounced in Mexico, Ternium’s primary market, where shipments were 1.91 million tons in the second quarter of 2021, up 48% from 1.30 million tons in the year-ago quarter.

The sharply positive year-over-year comparisons come because the outbreak of the COVID-19 pandemic last year sent steel prices and steel demand into a tailspin.

One area that is expected to see a decrease in the third quarter: shipments of slabs to third parties from Ternium’s operations in Brazil. That’s because the company aims to increase slab supplies to its own facilities – such as the new hot strip mill in Mexico.

By Michael Cowden, Michael@SteelMarketUpdate.com