Steel Products

Reshoring Helping to Push Ternium's Shipments Higher in Mexico

Written by Laura Miller

Mexico is benefiting from the trend of the reshoring of manufacturing as companies work to secure reliable supply chains and be closer to their end markets. As a result, Ternium’s Mexican operations are seeing increasing shipments and market share. Company executives discussed this and other topics on the company’s first-quarter earnings conference call on Wednesday, April 26.

Ternium logoWith a technical labor force, shorter lead times, and lower transportation costs to end markets, “Mexico is a beneficiary of this [reshoring] dynamic,” explained Ternium CEO Maximo Vedoya.

The country’s industrial real estate sector has a national occupancy rate of 97%, he noted, and that rate is even higher at 99% if you consider just the northern part of the country. While there was not much of a change in steel consumption within Mexico in Q1 this year vs. last year, said Vedoya, Ternium’s shipments in the country were 500,000 metric tons higher year over year. Additionally, Q1 shipments improved 10% sequentially, reaching an all-time high of 2.1 million metric tons, “reflecting Ternium’s increased market share,” said CFO Pablo Brizzio. The company expects to see sustained or slightly higher shipments in the current quarter and to continue that trend through the remainder of the year. By year’s end, shipments are anticipated to be 20-25% higher than last year. “We are increasing our market share, especially in the automotive industry, as the certification process of new products from the new hot rolling mill in Pesqueria advances,” Vedoya said. The hot rolling mill is currently running at about 88% of capacity and the company is attempting to increase production in the older mill. “So we have some space, but we don’t have a lot of space to increase much more of our shipments,” he noted. “Apparent steel demand in the Mexican market remains healthy,” Vedoya stated, with restocking that began in Q4 of last year not yet showing signs of slowing. The reshoring trend should increase demand further, he said, with some of Ternium’s own customers increasing their capacities and new customers also requiring much more steel. The only potential negative impact could come from the macroeconomic environment with rising interest rates and “a so-called recession in the US,” Vedoya noted. Having spoken of a potential recession for several quarters now, however, customers are now expecting “a softening, but they don’t expect a huge recession,” he said.    By Laura Miller,

Laura Miller

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