Ternium reports rise in steel shipments

Luxembourg-based steelmaker Ternium, which produces much of its steel in Central and South America, reports a 4 percent increase in steel shipments but a decrease in profits in the second quarter of 2019.

Ternium’s operating income decreased to $238.3 million in the second quarter of 2019, “reflecting a decrease in operating margin,” which was partially offset by a gradual recovery of shipments in the Argentine flat steel market and an increase of slab sales to other markets, the company says. The decrease was because of a $27 decrease in steel revenue per ton, partially offset by a 128,000-ton increase in steel shipments. Revenue per ton decreased mainly reflecting lower steel prices in most of Ternium's steel markets, the company reports.

Ternium expects EBITDA (earnings before interest, taxes, depreciation and amortization) to decrease in the third quarter of 2019 compared with the second quarter of 2019 because of a steel margin that will be “below historical long-term trends and lower shipments.”

The company anticipates steel shipments in Mexico to “gradually recover” during the second half of 2019, reaching higher levels than those reported for the second half of 2018. In addition, Ternium says it expects steel prices in Mexico to decrease as the lagged reset of contract prices for industrial customers during the third quarter of 2019 will reflect the steel price downturn during the second quarter of 2019. This should be partially offset by the recent rebound of prices on sales to the commercial markets, the steelmaker says.

In Argentina, Ternium anticipates an additional increase in steel shipments in the third quarter of 2019 because of an improvement in the domestic steel market.

The steel segment’s operating income was $230.9 million in the second quarter of 2019, a decrease of $320.6 million compared with the second quarter of 2018 as a result of lower revenue per ton and higher operating cost per ton. Revenue per ton decreased 7 percent from lower steel prices in Mexico and other markets. Shipments increased by 11,000 tons arising from higher slabs shipments in other markets.

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