Steel Products
Reshoring Helping to Push Ternium's Shipments Higher in Mexico
Written by Laura Miller
April 26, 2023
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.
With 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@steelmarketupdate.com

Laura Miller
Read more from Laura MillerLatest in Steel Products

CRU: EC to toughen steel safeguards
The European Commission proposes cutting its steel import quota by almost half, with volumes exceeding the limit facing 50% duties. The region’s steel industry welcomes the move, while other steel-producing nations fear the consequences. CRU published an insight before this announcement, noting that more restrictive trade policy could significantly raise the cost of marginal supply […]

US and Canadian rig counts stabilize
US counts continue to hover just above historic lows, while Canadian figures remain comparatively healthy.

Plate market sources critique mill hikes amid current market conditions
Following spot market plate price increase notices issued by domestic mills this past week, participants are contemplating the rationale behind the increases and whether they will stick. Some sources anticipate that current market conditions will shift in November and believe the increases may set a new "pricing floor."

Oregon Steel Mills lifts plate prices by $60/ton
Oregon Steel Mills has joined other producers in announcing a price increase of at least $60 per short ton on steel plate.

CRU: Construction of pilot plant for green steel process starts
Voestalpine and partners have begun building an industrial-scale Hy4Smelt demonstration plant in Linz, Austria, which they hope will become key in the decarbonization of steel.