Ternium raises budget for Mexico project

Ternium has upped the budget for its large-scale expansion in Mexico.

The Luxembourg-based steelmaker estimates the total cost of its expansion plan in Pesquería to reach $4 billion, a 16% increase from its estimate in February, primarily due to higher construction costs and extended deadlines. The steelmaker now expects the new steel slab mill in Pesquería will begin operations by Q4’26.

The pickling and finishing lines have started operation. The cold-rolling mill and galvanized line are scheduled to begin on time in December.

Of the $4-billion price tag, $1.4 billion has been invested as of March, the company said.

Ternium’s sales volume in Mexico fell both sequentially and year over year in Q1’25, with uncertainty surrounding changing US trade policies weighing on shipments, primarily in the commercial steel market, the company said. However, Ternium’s sales to industrial customers remained relatively stable.

Tariff concerns

“Trade tension in recent months has created a climate of uncertainty, business confidence, and poses risk to global economic growth,” said CEO Maximo Vedoya on the first-quarter earnings call. “On the other hand, there is a consensus that unfair trade practices in recent decades have adversely impact manufacturing around the world. Many countries are now addressing this issue, which is a promising development.”

Vedoya noted the business climate in Mexico has been particularly challenging, but said the Mexican government is working to reduce reliance on Asian suppliers.

“The future renegotiation of USMCA presents a significant opportunity for Mexico to further align its straight strategy with that of the United States, while also enhancing the defense of the Mexican market against unfair trade practices from Asian countries,” he said.

Capital expenditures were $518 million, mainly in connection with the ongoing expansion in Pesquería, Mexico.

Outlook

In the second quarter, Ternium anticipates a double-digit EBITDA margin supported by the increase in real asset prices in Mexico, as well as by cost-cutting initiatives.

Mexico steel volumes are expected to remain subdued in Q2, while in Argentina, shipments are expected to rise due to improving macroeconomic environment. In Brazil, Ternium expects volumes to be stable.