Q2 2024 Ternium SA Earnings Call

Thank you for standing by. My name is Kayla and I will be your conference operator today. At this time, I would like to welcome everyone to the Ternium Second Quarter 2024 results.

Operator: At this time, I would like to welcome everyone to the Ternium Second Quarter 2024 results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number 1 on your telephone keypad.

Operator: At this time, I would like to welcome everyone to the Ternium second quarter 2024 results. All lines have been placed on mute to prevent any background noise.

Operator: After the speakers are marked, there will be a question in the answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star in one.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again press the star and 1. I would now like to turn the call over to Sebastian Marti. You may begin.

Sebastin Marti: I would now like to turn the call over to Sebastin Marti. You may begin. Thank you. Good morning, and thank you for joining us.

Operator: If you would like to withdraw your question, again press the star and 1. I would now like to turn the call over to Sebastian Marti. You may begin. Thank you. Good morning and thank you for joining us.

Sebastin Marti: My name is Sebastin Marti, Ternium Global IR and Comprehensive Director. Yesterday, Ternium released its financial results from the second quarter and the first half of 2024. This call is intended to compare that presentation. And joined today by Maximo Veregia, Ternium's Chief Executive Officer and Paolo Rocca, Ternium's Chief Financial Officer, with discussions, business environment and performance.

Sebastin Mart: My name is Sebastian Mart, Ternium's global IR and compliance officer. Yesterday, Ternium released its financial results for the second quarter and the first half of 2024. We are joined today by Maximo Vedoya, Ternium's Chief Executive Officer, and Pablo Brizzio, Ternium's Chief Financial Officer, who will discuss Ternium's business environment and portfolio. We will open the Q&A to questions following our prepared remarks. Before we begin, I would like to remind you that this conference call contains forward-looking information and that actual results may differ from those expressed during the conference.

Sebastian Marti: Thank you. Good morning and thank you for joining us. My name is Sebastin Mart, Ternium's Global IR and Compliance Senior Director.

Speaker Change: Yesterday, Ternium released its financial results for the second quarter and the first half of 2024. This call is intended to complement that presentation.

Speaker Change: I'm joined today by Maximo Vedoya, Ternium's Chief Executive Officer, and Pablo Brizzio, Ternium's Chief Financial Officer, who will discuss Tern's business environment and performance.

Sebastin Marti: We will open the clear two questions following our preparation marks. Before we begin, I would like to remind you that this conference call contains four looking information and that actually results may vary from those expressed or implied. Factors that could affect results are contained in our findings with the Securities and Exchange Commission and on page two in today's webcast presentation. You will also find any reference to one IFRS financial measures reconciled to the most directly comparable IFRS measures in the press release issued yesterday.

Speaker Change: We will open the floor to questions following our prepared remarks.

Speaker Change: Before we begin, I would like to remind you that this conference call contains forward-looking information and that actual results may vary from those expressed or implied. Factors that could affect results are contained in our filings with the Securities and Exchange Commission and on page 2 in today's webcast presentation.

Sebastin Mart: Factors that could affect results are contained in our filings with the Securities and Exchange Commission and on page two of today's webcast presentation. You will also find any reference to non-IFRS financial measures reconciled to the most directly comparable IFRS measures in the press release.

Speaker Change: You will also find any reference to non-IFRS financial measures reconciled to the most directly comparable IFRS measures in the press release issued yesterday.

Maximo Vedoya: With that, I turn the call over to Mr. Venosa. Good morning, and thank you for joining us today for our second quarter's earnings call. Ternium posted a healthy, adjusted ABDA of $545 million for the second quarter. Maintaining stable shipment with a 12% margin during a weak steel price environment. A company generated strong cash from operation of $656 million, which contributed to maintaining a solid net cash position of $1.9 billion, even after distributing record dividends during the quarter and sustaining significantly capital expenditures due to ongoing expansion in idiots.

Maximo Vedoya: With that, I'll turn the call over to... Good morning, and thank you for joining us today for our second quarter earnings call. Ternium posted a healthy adjusted EBDA of $545 million for the second quarter, maintaining stable shipments with a 12% margin during a weak steel price environment. The company generated strong cash-from-operations of $656 million, which contributed to maintaining a solid net cash position of $1.9 billion, even after distributing record dividends during the quarter and sustaining significant capital expenditures due to ongoing expansion in yield.

Maximo Vedoya: In addition, net income during the quarter was affected by the recording of an accounting provision that we were required to make as a result of an adverse Brazilian court decision issued last June related to our acquisition of a stake in Usiminas back in 2012. Ternium believes that such decision is contrary to applicable substantive and procedural law. We did not acquire sole control over Simina when we joined the control group. The court's change in their previous view, now finding that a change of control occurred, contradicts both the terms of the Simina shareholders' agreement and how Simina's governance worked in reality.

Speaker Change: With that, I turn the call over to Mr. Vedosa.

Maximo Vedoya: Good morning, and thank you for joining us today for our second quarter's earnings call.

Maximo Vedoya: Ternium posted a healthy adjusted EBDA of $545 million for the second quarter, maintaining stable shipments with a 12% margin during a weak steel price environment.

Maximo Vedoya: which contributed to maintaining a solid net cash position of $1.9 billion even after distributing record dividends during the quarter and sustaining significant capital expenditures due to ongoing expansion initiatives.

Maximo Vedoya: In addition, net income during the quarter was affected by the recording of an accounting provision that we were required to make as a result of an adverse Brazilian court decision issued in last June. Related to our acquisition of a stake in Useminas back in 2012. Ternium believes that such decision is contrary to applicable substantive and procedural law. We did not acquire sole control over Useminas when we joined the control group. The courts change in their previous view, now finding that the change of control or court contradict both the terms of Useminas, your homeless agreement and how Useminas governance worked in reality.

Maximo Vedoya: In addition, net income during the quarter was affected by the recording of an accounting provision

Speaker Change: Ternium believes that such decision is contrary to applicable substantive

Speaker Change: and Procedural Law.

Speaker Change: We did not acquire sole control over Suminas when we joined the control group. The courts changed in their previous view, now finding that a change of control occurred contradicts.

Speaker Change: Both the terms of the Ushimina Shareholders Agreement and how Ushimina's governance worked in reality.

Maximo Vedoya: Consequently, we plan to strongly defend our position, which has been confirmed by a long line of presidents and court decisions. And find all motions and a build available to us. All such notions and appeals will need to be resolved before the case becomes final.

Maximo Vedoya: Consequently, we plan to strongly defend our position, which has been confirmed by a long line of presidents and court decisions, and to make all motions and appeals available to us. All such issues and appeals will need to be resolved before the case becomes final, and the determination of an actual payment amount, if any, should be made by a lower court in a separate proceeding.

Speaker Change: Consequently, we plan to strongly defend our position, which has been confirmed by a long line of presidents and court decisions, and file all motions and appeals available to us.

Speaker Change: All such notions and appeals will need to be resolved before the case becomes final. And the determination of an actual payment amount, if any, should be made by a lower court in a separate proceeding.

Maximo Vedoya: And the determination of an actual payment amount, if any, should be made by a lower court in a separate proceeding.

Maximo Vedoya: Let me now give you an update on our growth projects. I am glad to say that we just started up the first line in the downstream project, a $550,000 split in line. And also the first line in our new finishing center in Pesquedia. The rest of the finishing lines should be ready by the end of the year. And the call rolling mill and galvanized lines are on track to be delivered between the end of next year and the beginning of 2026. In a vision in early July, we introduce a new galvanized simulator in our R&D center in Mexico.

Maximo Vedoya: Let me now give you an update on our growth project. I am glad to say that we have just started up the first line in the downstream project, a 550,000 ton splitting line, and also the first line in our new finishing center in Pescari. The rest of the finishing lines should be ready by the end of the year, and the cold rolling mill and galvanized lines are on track to be delivered between the end of next year and the beginning of 2020. In addition, in early July, we introduced a new galvanized simulator at our R&D center in Mexico.

Speaker Change: Let me now give you an update on our growth projects.

Speaker Change: I am glad to say that we just started up the first line in the downstream project, a 550,000 ton splitting line.

Speaker Change: and also the first line in our new finishing center in Pesquería. The rest of the finishing lines should be ready by the end of the year and the cold rolling mill and galvanized lines are on track to be delivered between the end of next year and the beginning of 2026.

Speaker Change: In addition, in early July , we introduced a new galvanized simulator in our R&D center in Mexico.

Maximo Vedoya: This will enable us to shorten certification times and improve the assessment of our product quality. With the downstream project in Mexico and our new R&D center, we are adding more value-added products that will enable us to better serve our customers in the automotive, renewable energy, and high-end appliance industry, as well as in construction and agriculture. These new lines are a great opportunity for us to consolidate our position as a leading steel supplier in the region, as we continue to meet the demand for high-end steel products in Mexico, displacing steel imports and benefiting from near shores.

Maximo Vedoya: This will enable us to shorten certification times and improve the assessment of our product quality. With the downstream project in Mexico and our new R&D center, we are adding more value added products that will enable us to better serve our customers in the automotive, renewable energy and high-employment industries, as well as in the construction and agriculture sectors. These new lines are a great opportunity for us to consolidate our position as a leading steel supplier in the region, as we continue to meet the demand for high-end steel products in Mexico, displacing steel imports and benefiting from near-sharing.

Speaker Change: This will enable us to shorten certification times and improve the assessment of our product quality.

Speaker Change: With the downstream project in Mexico and our new R&D center, we are adding more value-added products that will enable us to better serve our customers in the automotive, renewable energy, and high-appliance industries.

Speaker Change: As well as in the construction and agriculture sectors.

Speaker Change: These new lines are a great opportunity for us to consolidate our position as a leading steel supplier in the region, as we continue to meet the demand for high-end steel products in Mexico, displacing steel imports and benefiting from nearshoring.

Maximo Vedoya: In addition, the new 2.6 million tons steel slab mill in Pesquaria continues to advance, with completion expected by mid-2020-26. These projects will enhance our capabilities in the USMCA region and position us as a leader in low emission steel making. This is a large expansion project in our history, and we're thrilled about its progress.

Maximo Vedoya: In addition, the new 2.6 million tons still slab mill in Pesqueria continues to advance, with completion expected by mid-2020. This project... will enhance our capabilities in the USMCA region and position us as a leader in low-emission steelmaking. This is the largest expansion project in our history, and we are thrilled about its progress. Let me now make some comments about our main skill mark.

Speaker Change: In addition, the new 2.6 million tons spill slab mill in Pesquería continues to advance, with completion expected

Speaker Change: by mid-2026.

Speaker Change: This project will enhance our capabilities in the USMCA region and position us as a leader in low-emission steelmaking.

Speaker Change: This is the largest expansion project in our history, and we are thrilled about its progress.

Maximo Vedoya: Let me now make some comments about our main steel markets. The steel market in Mexico remains healthy, operating at good levels after last year's significant 14% year-over-year increase in apparent steel consumption. The industrial steel market is stable and strong, with the auto industry showing healthy steel demand. Automotive production in Mexico in the first half of this year increased 5% year over year. The commercial market has been a little more affected by the steel prices downturn during the quarter, which induces a destocking process. In addition, construction activity has worked by a tropical storm by the end of the quarter.

Maximo Vedoya: The steel market in Mexico remains healthy, operating at good levels after last year's significant 14% year-over-year increase in apparent steel consumption. The industrial steel market is stable and strong, with the auto industry showing healthy steel demand. Automotive production in Mexico in the first half of this year increased 5% year over year. The commercial market has been a little more affected by the steel price downturn during the quarter, which has caused a de-stocking process. In addition, construction activity has been impacted by a tropical storm by the end of the quarter.

Speaker Change: The steel market in Mexico remains healthy, operating at good levels after last year's significant 14% year-over-year increase in apparent steel consumption.

Speaker Change: The industrial steel market is stable and strong, with the auto industry showing healthy steel demand. Automotive production in Mexico in the first half of this year increased 5% year-over-year.

Maximo Vedoya: On the other hand, activity related to warehousing and logistics infrastructure continues to be strong, as well as natural gas pipeline projects. A recent development in this market was the implementation by the U.S. administration of a 25% duty under Section 232 on imports from Mexico of steel produced, not melted, and poor in the USMCA region. Following this, Mexico's president announced that export of steel products made with Brazilian steel would be exempted from this duty. This exception is in the process of being forwarded.

Maximo Vedoya: On the other hand, activity related to warehousing and logistics infrastructure continued to be strong, as well as natural gas pipeline projects.

Maximo Vedoya: A recent develop in this market was implementation of the U by the US administration of a 25% duty and the Section 232. On imports from Mexico of steel produced, not melted, ample in the USMCA region. Following this, Mexico's president announced that export of steel products made with Brazilian steel could be exempted from this duty. This exception is in process of being forced. But regarding this subject, there has been much discussion in the U.S. market about a supposed surge of Mexican-style imports, and about the need to control trans-shinments of Chinese-style through Mexico. So let me be clear, this view is mistaken, and trade data indicates even the opposite situation.

Speaker Change: A recent development in this market was the implementation by the U.S. administration of a 25% duty under Section 232 on imports from Mexico of steel produced

Speaker Change: not melted and poor in the USMCA region. Following this, Mexico's president announced that export of steel products made with Brazilian steel would be exempted from this duty. This exception is in process of being formed.

Maximo Vedoya: Regarding this subject, there has been much discussion in the U.S. market about a supposed surge in steel production and Mexican steel imports and about the need to control the transshipment of Chinese steel through Mexico. But, let me be clear, this view is mistaken. And trade data indicates even the opposite situation. Still, trade between Mexico and the U.S. is mutually beneficial, with a surplus for the U.S. In 2023, the U.S. exported 4.1 million metric tons of finished steel to Mexico.

Speaker Change: Regarding this subject, there has been much discussion in the U.S. market about a supposed surge of Mexican steel imports and about the need to control transshipments of Chinese steel through Mexico.

Maximo Vedoya: Still trade between Mexico and the U.S. is mutually beneficial, with a surplus for the U.S. In 2023, the U.S. export 4.1 million metric tons of finishes still to Mexico. On the other hand, Mexico exported 2.3 million tons of finishes still to the U.S. This is 43% less than what the U.S. had export to Mexico. Look at these numbers in terms of market share, still from the U.S. 14% of Mexico market share, while Mexico still represents only 2.5% of U.S. market share. Regarding the surge in imports from Mexico, when comparing the first five months of this year, U.S.

Speaker Change: Steel trade between Mexico and the U.S. is mutually beneficial.

Speaker Change: with a surplus for the U.S.

Speaker Change: In 2023, the U.S. exported 4.1 million metric tons of finished steel to Mexico. On the other hand, Mexico exported 2.3 million tons of finished steel to the U.S. This is 43% less.

Maximo Vedoya: On the other hand, Mexico exported 2.3 million tons of finished steel to the U.S. This is 43% less than done what the U.S. has ever put to next. Look at these numbers in terms of market share. Steel from the U.S. represents 14 percent of the Mexican market, while Mexico Steel represents only 2.5 percent of the U.S. market. Regarding the surge in imports from Mexico, when comparing the first five months of this year, U.S. exports of finished steel to Mexico increased by 7% compared to the same period in 2023. By contrast, Mexican exports to the United States decreased by 12%.

Speaker Change: done what the U.S. has done to Mexico.

Speaker Change: Looking at these numbers in terms of market share, steel from the U.S. represents 14% of Mexican market share, while Mexico Steel represents only 2.5% of U.S. market share.

Speaker Change: Regarding the surge in imports from Mexico, when comparing the first five months of this year, U.S. exports of finished steel to Mexico increased by 7% compared to the same period

Maximo Vedoya: export of finished yield to Mexico increased by 7% compared to the same period in 2023. In contrast, Mexican export to the U.S. decreased by 12%. This follows the trend observed in 2023, when U.S. export of finished still to Mexico rose by 11%, while Mexico export to the U.S. declined by 28% year over year. And regarding China's transshipments, U.S. Statistics published in FEMA show that in 2023, 144,000 tons of yield melted in China entered the U.S. via third countries. Of that volume, 62% come from Thailand, 15% from Oman, 13% from Canada. Mexico was responsible for only 0.2% of that volume, almost nothing.

Speaker Change: in 2023, in concert.

Speaker Change: Contrast, Mexican export to the U.S. decreased by 12 percent.

Maximo Vedoya: These follow the trend observed in 2023, when U.S. export of finished steel to Mexico rose by 11%, while Mexican export to the U.S. declined by 28% year-over-year. And regarding China's transshipment, U.S. statistics published in FEMA show that in 2023, 144,000 tons of steel melted in China entered the U.S. via third countries; of that volume, 52% came from Thailand, 15% from O Mexico was responsible for only 0.2% of that volume, almost.

Speaker Change: This followed the trend observed in 2023, when U.S. exports of finished steel to Mexico rose by 11%, while Mexican exports to the U.S. declined by 28% year-over-year.

Speaker Change: And regarding China's transshipment, U.S. statistics published in FEMA shows that in 2023, 144,000 tons of steel melted in China entered the U.S. via third countries.

Speaker Change: of that volume, 52% come from Thailand, 15% from Oman, 13% from Canada. Mexico was responsible for only 0.2% of that volume, almost nothing.

Maximo Vedoya: Mexico has shown a strong commitment to fight against unfair trade practice, mainly from Asia countries, which truly harmed the U.S. NCA economy, and it continues, and Mexico continues to work on this issue. So to avoid misconception, U.S. USA trade data plainly show that there's neither a surge, nor China's transshipment in Mexico still adds parts to the U.S. market.

Maximo Vedoya: Mexico has shown a strong commitment to fighting against unfair trade practices, mainly from Asian countries, which truly harm the U.S.-NCAE economy, and Mexico continues to work on this. So, to avoid misconceptions, U.S.A. trade data plainly show that there's neither a surge nor China's transcendent in Mexico Steel exports to the U.S. Moving now to Brazil, the operational issues we had with one blast furnace in our Rio de Janeiro slab facility were resolved, and the furnace is back to full capacity now, although this had an impact on our shipment in Mexico during the second quarter.

Speaker Change: Mexico has shown a strong commitment to fight against unfair trade practice, mainly from Asian countries, which truly harm the US NCAE economy, and Mexico continues to work on this issue.

Speaker Change: So, to avoid misconception, U.S. trade data plainly show that there's neither a surge nor China's transceiment in Mexico Steel exports to the U.S. market.

Maximo Vedoya: Moving now to Brazil, the operational issues we had with one blast furnace in our Rio, the Zanero facility, the slab facility were resolved, and the furnace is back to full capacity now. Although this had an impact on our shipments in Mexico during the Second World War. On the other hand, Usimina Shinment in Brazil grew by 6% with growth in all segments, especially in the automotive industry and manufacturing sector, reflecting growth in apparent consumption of flat fields in the country during the second quarter. Putsch Street production increased 17% in the second quarter. This is you to the stabilization of Simina's blast furnace number 3, which has now finished its ramp up.

Speaker Change: Moving now to Brazil, the operational issues we had with one blast furnace in our Rio de Janeiro slab facility were solved and the furnace is back to full capacity now.

Speaker Change: Although this had an impact on our achievements in Mexico during the second quarter.

Maximo Vedoya: On the other hand, Usimina shipments in Brazil grew by 6%, with growth in all segments, especially in the automotive industry and manufacturing sector, reflecting growth in apparent consumption of flat steel in the country during the Second World War. Crude steel production increased 17% in the second quarter.

Speaker Change: On the other hand, Usimina shipments in Brazil grew by 6%, with growth in all segments, especially in the automotive industry and manufacturing sector, reflecting growth in apparent consumption of flat steels.

Speaker Change: Crude steel production increased 17% in the second quarter. This is due to the stabilization of Usimina's blast furnace number 3.

Maximo Vedoya: This is due to the stabilization of Usimina's blast furnace number three, which has now finished its ramp-up. In June, this blast furnace was able to achieve the highest monthly production of the last 11 years. There are significant efficiency gains being achieved as what Ushimita does today with two blast furnaces in the past was done with three blast furnaces.

Maximo Vedoya: In June, this blast furnace was able to achieve the highest monthly production of the last 11 years. There are significant efficiency gains being achieved as what Simina's last today with two blast furnace in the past was done with three blast furnace.

Speaker Change: which has now finished its ramp-up. In June , this blast furnace was able to achieve the highest monthly production of the last 11 years.

Speaker Change: There are significant efficiency gains being achieved as what Ucimina does today with two blast furnaces in the past was done with three blast furnaces.

Maximo Vedoya: On the other hand, as we have talked in the past, the Brazilian steel sector faces a serious threat from imports in the domestic market and the predatory conditions monthly from China. The region increase in import tariffs to 25% for some steel products that exceed a certain quarter is a positive, but until now inefficient measure. It falls short of what other countries in the region has adopted to save what their local producers, and we have not seen any significant decline in imports during the second quarter. We have faith that the authorities will acknowledge this situation and maintain their cost of action with the introduction of additional price measures down the road.

Maximo Vedoya: On the other hand, as we have discussed in the past, the Brazilian steel sector faces a serious threat from imports in the domestic market under predatory conditions monthly from China. The recent increase in import tariffs to 25% for some steel products that exceed a certain quarter is a positive, but until now, inefficient measure. It falls short of what other countries in the region have adopted to safeguard their local produce.

Speaker Change: On the other hand, as we have talked in the past, the Brazilian steel sector faces a serious threat from imports in the domestic market.

Speaker Change: and the predatory conditions monthly from China. The recent increase in import tariffs to 25% for some steel products that exceed a certain quota is a positive, but until now, inefficient measure.

Maximo Vedoya: And we have not seen any significant decline in inputs during the second quarter. The authorities will acknowledge the situation and maintain their course of action with the introduction of additional trace measures down the road. In Argentina, shipments began to recover after a significant decrease in the first quarter, reflecting a gradual improvement in shield demand, although they continue to be affected by the short-term impact of Argentina's government economic stabilization measures on the construction and industrial sectors.

Speaker Change: And we have not seen any significant decline in inputs during the second quarter. We have faith that the authorities will acknowledge this situation and maintain their course of action with the introduction of additional trace measures down the road.

Maximo Vedoya: In Argentina, Simina's began to recover after the they continued to be affected by short-term impact of Argentina's government economic stabilization measures on the construction and industrial sectors. On our climate change initiative, our climate change inhibitors are advancing with the own scheduled construction of our first wind farm in Buenos Aires, Province in Argentina, which should be operational by year end. In addition, our technical school in Pesquaria was recognized by the Mexican government in the voluntary national reports towards United Nations Agenda for Sustainability Development. Our technical school was considering an institution that served as a model of how companies can possibly impact their communities and sustainability.

Speaker Change: Shipments began to recover after the significant decrease in the first quarter, reflecting a global improvement in shield demand, although they continue to be affected by the short-term impact of Argentina's government economic stabilization measures on the construction and industrial sectors.

Maximo Vedoya: On our climate Change Initiative, our climate Change initiatives are advancing with the on-schedule construction of our first wind farm in Buenos Aires province, Argentina, which should be operational by the year 2021. In addition, our technical school in Pesqueria was recognized by the Mexican government in the Voluntary National Reports Towards the United Nations Agenda for Sustainability Development. Our technical school was considered an institution that served as a model of how companies can positively impact their communities and sustainability. Since its inception in 2016, the school has graduated more than 600 students, with 83% either studying or employed.

Speaker Change: On our climate change initiative, our climate change initiatives are advancing with the on-schedule construction of our first wind farm in Buenos Aires province in Argentina, which should be operational by year-end.

Speaker Change: In addition, our Technical School in Pesqueria was recognized by the Mexican government in the Voluntary National Report towards United Nations Agenda for Sustainability Development.

Speaker Change: Our technical school was considered an institution that serves as a model of how companies can positively impact their communities and sustainability.

Maximo Vedoya: Since it started in 2016, the school has graduated more than 600 students, with 83% either starting or employed. We are extending this practice to Brazil with the construction of our second technical school in Santa Cruz near our plant in Rio de Janeiro, which with activities set to commence next.

Speaker Change: Since its start in 2016, the school has graduated more than 600 students, with 83% either studying or employed.

Maximo Vedoya: Extending this practice to Brazil with the construction of our second technical school in Santa Cruz near our plant in Rio de Janeiro, which activities are set to commence next. Finally, I am positive regarding Ternium's performance as we move through the following quarter. After an expected bottoming of margins in the third quarter related to the lax reset of contract prices at lower levels, we anticipate shipments to continue growing with healthy demand in our main market and margins to increase as steel prices are beginning to rise and costs are showing a downtrend.

Speaker Change: We are extending this practice to Brazil with the construction of our second technical school in Santa Cruz, near our plant in Rio de Janeiro, with activities set to commence next year.

Maximo Vedoya: Finally, I am positively regarded in terms of performance as we move through the following orders. After an expected bottom of margins in the third quarter, related to the lack reset of contract price at lower levels, we anticipate Simina to continue growing with healthy demand in our main market and margins to increase. Still prices are beginning to rise, and costs are showing down trade.

Speaker Change: Finally, I am positive regarding Ternium's performance as we move through the following quarters.

Speaker Change: After an expected bottom of margins in the third quarter, related to the lack reset of contract price at lower levels, we anticipate shipments to continue growing with healthy demand in our main market, and margins to increase as steel prices are beginning to rise and costs are showing downtrends.

Pablo Rocca: Okay, Pablo, please proceed now with your comments about our performance in the second quarter. Thanks, Maximo, and good morning to everyone.

Maximo Vedoya: Okay, Pablo, please proceed now with your comments about our performance in the second quarter. Thanks, Maximo, and good morning to everyone. Let's now look at the webcast presentation for details of the view of our company operating on a financial basis. If that would take three, we will review the second quarter. Our trusted ADBA achieved $545 million. The primary driver of sequential change was lower realized prices in a working market, together with a modest rise in cost per ton. Consequently, our adjusted VBA margins saw a slight decrease, settling at 12%.

Speaker Change: Okay, Pablo, please proceed now with your comments about our performance in the second quarter.

Pablo Rocca: Let's now look at the webcast presentation for details review of our company operating on financial service. This is that we take three; we will review the second quarter performance. I want to trust with the VDA achieved $545 million. The primary driver of the sequential chain, who are lower realized prices in our market, together with the most rise in cost of time. Consequently, I would have trusted the VDA in my sense of slight decrease, settling at 12%. Looking ahead to the third quarter, Timna is expected to decline that just the VDA, that is mainly due to a decrease in achieved in the weekly machines, although increase events across the market will partially upset this impact.

Pablo: Thanks Maximo and good morning to everyone. Let's now look at the webcast presentation for details review of our company operating and financial results.

Pablo: If we start with page 3, we will review the second quarter performance. Our adjusted EVDA achieved $545 million.

Speaker Change: The primary drivers of sequential change were lower realized prices in a working market, together with a modest rise in cost per ton. Consequently, our adjusted VBA margins saw a slight decrease, settling at 12%.

Pablo Daniel Brizzio: Looking ahead to the third quarter, Ternium expects a decline that's up to the VDA, but it's mainly due to a decrease in the VBA margins, although increased shipments across key markets will partially offset this. We anticipate lower realized steel prices in the third quarter, primarily because contract prices in Mexico will adjust to lower levels as a result of soft spot prices, conditions during the second quarter. The team's income during the quarter was negatively affected by a recording of a $783 million provision for the ongoing litigation related to the acquisition of her participation in UC Minas in 2012.

Speaker Change: Looking ahead to the third quarter.

Speaker Change: In the BDA margins, although increased shipments across key markets will partially offset this impact. We anticipate lower realized steel prices in the third quarter, primarily because contract prices in Mexico will adjust to lower levels as a result of soft spot prices conditions during the second quarter.

Pablo Rocca: We anticipate lower realized still prices in the third quarter. Primarily because contract prices in Mexico will adjust to lower levels as a result of soft spot prices, conditions during the second quarter.

Pablo Rocca: Metine can be during the quarter was negatively affected by a recording of $783 million provision for the ongoing litigation related to acquisition of the participation in the U.S. Minas in 2012, that is maxima already mentioned. We will require to make a result of the reverse Brazilian court decision issued in June. Excluding this provision, adjusted metine can decrease sequentially to $40 million, reflecting a significant change in the third taxes of $191 million. Due to the 9% depreciation of the Mexican peso against the U.S. Dollar during the quarter.

Maximo Vedoya: Net income during the quarter was negatively affected by a recording of a $783 million provision for the ongoing litigation related to the acquisition of a participation in UC Minas in 2012 that Maximo already mentioned.

Pablo Daniel Brizzio: Maximo O'Reilly, We were required to make as a result of the Brazilian court decision issued. Excluding this provision, adjusted net income decreased sequentially to $40 million, reflecting a significant change in deferred taxes of $191 million due to the 9% depreciation of the Mexican peso against the U.S. dollar during the quarter.

Maximo Vedoya: We were required to make, as a result of the adverse Brazilian court decision issued in June .

Maximo Vedoya: Excluding this provision, adjusted net income decreased sequentially to $40 million, reflecting a significant change in deferred taxes of $191 million.

Maximo Vedoya: Due to the 9% depreciation of the Mexican Peso against the U.S. Dollar during the quarter.

Pablo Rocca: Now let's turn our attention to the performance of our steel segment from page 4. In our last earnings release call, we got you for increasing shipment in Mexico. In fact, timing is in shipment in Mexico; experience slightly climbed in the second quarter. As a Royal Cleaner Maximum in the commercial market, demand was negatively affected by a downturn in steel prices during the whole quarter. In addition, shipments were also negatively impacted by a topical storm, which affected the value change in the state of New Orleans at the Malipast during the year. In industrial market, the automotive industry remains strong, with some small decline in household appliances industry tied to increasing housing in the U.S.

Pablo Daniel Brizzio: Now let's turn our attention to the performance of our steel segment, on page 4. In our last earnings release call, we guided you for an increase in shipment in Mexico. In fact, Ternium S.A.'s shipment in Mexico experienced a slight decline in the second quarter. Maximo in the commercial market. Demand was negatively affected by the downturn in steel prices during the whole quarter.

Speaker Change: Now let's turn our attention to the performance of our steel segment on page 4. In our last earning release call, we gave you for an increase in shipment in Mexico. In fact, Ternium S.A. in Mexico experienced a slight decline in the second quarter.

Maximo Vedoya: As already explained by Maximo, in the commercial market, demand was negatively affected by the downturn in steel prices during the whole quarter. In addition, shipments were also negatively impacted by a tropical storm that affected the value chain in the state of Nueva León and Tamaulipas during June .

Pablo Daniel Brizzio: In addition, shipments were also negatively impacted by a tropical storm that affected the value chain in the state of Nueva León and Tamaulipas during the. In industrial markets, the automotive industry remains strong, with some small declines in the household appliances industry tied to a decrease in housing in the U.S. Looking forward, we anticipate consistent demand in Mexico's industrial and commercial markets with supply chain stocks at a manageable level. Shipments in Brazil increased sequentially by 6% in the second quarter, with growth across all segments, particularly in the automotive industry and manufacturing.

Speaker Change: In the industrial market, the automotive industry remains strong, with some small declines in the household appliances industry tied to decreasing housing in the U.S.

Pablo Rocca: Looking forward, we anticipate a consistent demand in Mexico industrial or commercial market with a plan change stops and manageable levels. Shipments in Brazil increased sequentially by 6% in the second quarter, with growth across all segments, particularly in the automotive industry and the manufacturing sector. Looking ahead, we expect a rise in shipment in the third quarter, supported by the projected growth of the automotive industry and advances in the construction sector. In the celebration, these shipments saw a slight increase, reflecting improving conditions in the Argentina steel markets. While the pace of the recovery for Argentina remains uncertain, we anticipate an increase in shipment in the third quarter.

Speaker Change: Looking forward, we anticipate a consistent demand in Mexico's industrial and commercial markets with supply chain stocks at manageable levels.

Speaker Change: Shipments in Brazil increased sequentially by 6% in the second quarter, with growth across all segments, particularly in the automotive industry and the manufacturing sector.

Pablo Daniel Brizzio: Looking ahead, we expect a rise in shipments in the third quarter, supported by the projected growth of the automotive industries and advances in the construction sector. In the southern region, steel shipments saw a slight increase, reflecting improving conditions in the Argentina steel market.

Maximo Vedoya: Looking ahead, we expect a rise in shipments in the third quarter, supported by the projected growth of the automotive industries and advances in the construction sector.

Maximo Vedoya: In the southern region, steel shipments saw a slight increase, reflecting improving conditions in the Argentina steel market. While the pace of the recovery for Argentina remains uncertain, we anticipate an increase in shipments in the third quarter.

Pablo Daniel Brizzio: While the pace of the recovery for Argentina remains uncertain, we anticipate an increased achievement in the third quarter. Let's now review the still strengthening consolidated sales and profitability on the next slide. Looking at the upper left chart, steel product sales declined in the second quarter, but this might be due to lower realized steel prices in Ternium's main market.

Pablo Rocca: Let's now review the still segment consolidated traits and profitability on the next page. Looking at the upper, less child, still product sales decline in the second quarter, primary view to lower relative prices in Ternium's main market. Cash-operated income per tone, a margin for the steel segment in the top right chart, were also impacted by the price decline. Additionally, cost per tone increased slightly during the speed. Looking ahead, respect Marcio's to recline sequentially in the third quarter, primary view to the reset of contract prices in Mexico to lower levels under current soft spot prices condition.

Maximo Vedoya: Let's now review the still strengthening consolidated sales and profitability on the next page.

Maximo Vedoya: Looking at the upper left chart, steel product sales declined in the second quarter, but I might be able to lower realized steel prices in Ternium's main market.

Pablo Daniel Brizzio: Cash operating income per ton and margin for the steel segment in the top right chart were also impacted by the price decline. Additionally, cost per ton increased slightly during the year. Looking ahead, we expect margins to decline sequentially in the third quarter, primarily due to the effect of contract prices in Mexico falling to lower levels and the current soft, Now let's turn to page 6 to examine the performance of the mining segment. We see that net phase for the mining segment remains stable.

Maximo Vedoya: Cash operating income per ton and margin for the steel segment in the top right chart were also impacted by the price decline. Additionally, cost per ton increased slightly during this period.

Maximo Vedoya: Looking ahead, we expect margins to decline sequentially in the third quarter, primarily due to the effect of contract prices in Mexico to lower levels under current soft spot prices conditions.

Pablo Rocca: Now let's turn to page six to examine the performance of the mining segments. We see that let's raise for the mining segments remain stable. Of course, volume and revenue per tone in the second quarter, whereas there is.

Maximo Vedoya: Now let's turn to page 6 to examine the performance of the mining segment.

Maximo Vedoya: We see that mid-phase for the mining segment remains stable. Both volume and revenue per ton in the second quarter were steady.

Pablo Daniel Brizzio: Both volume and revenue per ton in the second quarter were... On page 7, let's see, we are just in the VBA, and let's... As previously commented, the top chart highlighted the primary factors behind the sequential decrease in adjusted EVDA. You can see a drop in real estate prices in a working market and a minor increase in cost per ton. In the chart below, we can see the impact of net results from the decreased operating income and the higher deferred tax loss primary to depreciation of the next year.

Pablo Rocca: In page seven, let's see the adjusted the EPA and net income. As previously commented, the top chart highlighted the primary factors; we have the sequential decrease in adjusted the EPA. The significant top in relative prices in our market and the mining increase in cost per tone. In the curve below, we can see the impact of net results from the deal increased operating income and the higher referred at loss, primary to the depreciation of the Mexican person, as I mentioned before. It was positive that by improved financial results.

Maximo Vedoya: [inaudible]

Maximo Vedoya: As previously commented, the top chart highlighted the primary factors behind the sequential decrease in adjusted EVDA, a significant drop in real estate prices in a working market, and a minor increase in cost per ton.

Maximo Vedoya: In the chart below, we can see the impact of net results from the decreased operating income and the higher deferred tax loss primary to the depreciation of the Mexican Peso, as I mentioned before. This was partially offset by improved financial results.

Pablo Daniel Brizzio: Sponsored ADR Sponsored ADR Sponsored ADR Now let's proceed to the next slide to evaluate our cash flow performance in the second quarter. Strong cash flow provided by operational activities of $656 million, helped in part by a decrease in working capital. Capital expenditures were $409 million during this period.

Pablo Rocca: Now let's proceed to the next slide to evaluate our cash flow performance in the second quarter; it was. From cash flow provided by operational entities of six hundred and fifty six million, help in part by the case in working capital. Capital expenditure were for a hundred and nine million during the speed of the advance in development of a downstream. I'm actually projects in the area in the center and also the advances in the constructions in our new will fund in Argentina. The strong cash generating together with one hundred and fifty million increase in the fair value of financial instrument contributed to maintain turning solid financial position as of the end of the second quarter with the net cash position of one point nine billion dollars.

Maximo Vedoya: Now, let's proceed to the next slide to evaluate our cash flow performance in the second quarter.

Maximo Vedoya: Thank you.

Maximo Vedoya: Strong cash flow provided by operational activities of $666 million, helped in part by a decrease in working capital.

Pablo Daniel Brizzio: And we're advancing the development of the downstream and upstream projects in the Pesquera industrial center and also making advances in the construction of our new wind farm in Antioquia. The strong cash generated, together with a $150 million increase in the fair value of financial instruments, contributed to maintain Ternium's solid financial position as of the end of the second quarter, with a net cash position of $1.9 billion. Experiencing only a modest decline during the quarter while we paid a record level of, Turning to page 9, the table performance for the first half of the year.

Maximo Vedoya: Capital expenditure were $409 million during this period, as we advance in the development of the downstream and upstream projects in Tosquería industrial center, and also the advances in the construction of our new wheat farm in Argentina.

Maximo Vedoya: The strong cash-generated, together with $150 million increase in the fair value of financial instruments, contributed to maintain Ternium's solid financial position as of the end of the second quarter, with a net cash position of $1.9 billion.

Pablo Rocca: Experiencing only a more decline in the quarter, why the paid a record level of the.

Maximo Vedoya: Experiencing only a modest decline during the quarter while we paid a record level of dividends.

Pablo Rocca: Turning to page nine, let's give a performance on the fair cash over a year. Still, shipment reached seven point seven million tons in the high health. This growth was probably driven by a conservation of U.C. Minas, which also influenced mining shipment as well in the upper right chart. Adjusting the media for the first half of the year was one point five one point four billion dollars. The margin decline year over year largely due to the lowest prices and the consolidation of U.C. Minas in the second half of last year. In the lower right chart, adjust the earnings radius to at one point seven in the first half.

Speaker Change: Turning to page 9, let's see our performance on the first cut of the year.

Pablo Daniel Brizzio: Steel shipment reached 7.7 million tons in the Arajal. This growth was primarily driven by the consolidation of Yucilinas, which also influenced mining shipments as well in the upper right. Adjusting the EDA for the first half of the year, the margin decline year-over-year was largely due to lower steel prices and the consolidation of miscellaneous in the circle cuts of oil. In the lower right chart adjusted, the earnings per ADS stood at 1.7 in the first quarter.

Speaker Change: Steel shipment reached 7.7 million tons in the Jalajal. This growth was primarily driven by the consolidation of Yucilinas, which also influenced mining shipments, according to the upper right chart.

Speaker Change: HSE's EDA for the first half of the year was $1.4 billion.

Speaker Change: The margin declined year-over-year, largely due to the lower steel prices and the consolidation of miscellaneous in the circle of health of last year.

Speaker Change: In the lower right chart, adjusted, the earnings for ADS stood at 1.7 in the first half.

Pablo Rocca: This represents a decline compared to the first half of last year. The decrease is attributed to lower operating results and the deferred backlash I mentioned before. On the finance lights, cash flow from operation was strong in the first half of 2024.

Speaker Change: These represent a decline compared to the first half of last year.

Speaker Change: The decrease is attributed to lower operating results and the deferred tax loss I mentioned before. On the final slide, cash flow from operations was strong in the first half of 2024.

Pablo Daniel Brizzio: The decrease is attributed to lower operating results and the deferred tax loss I mentioned before. On the final slide, cash flow from operations was strong in the first half of 2024, amounting to $1.1 billion. After accounting for capital expenditures of $858 million, free cash flow in the first half of the year was $274 million.

Pablo Rocca: Amounting to one point one billion dollars after a country for capital expenditures of eight hundred and fifty eight million three cash flow in the first half of the year was two hundred and seventy for me.

Maximo Vedoya: amounting to $1.1 billion after accounting for capital expenditures of $858 million. Free cash flow in the first half of the year was $274 million.

Operator: So with this, we will initial remarks, and we can now start the QA session. Thank you very much for your attention. Please go ahead. And, as a reminder, if you would like to ask a question, please press star number one on your telephone keypad.

Sebastin Mart: So with this, we have prepared our initial remarks, and we can now start the Q&A. Thank you very much for your attention.

Maximo Vedoya: So with this, we prepare our initial remarks, and we can now start the Q&A session.

Speaker Change: Thank you very much for your attention. Please go ahead.

Operator: And as a reminder, if you would like to ask a question, please press star and the number one on your telephone keypad. Our first question comes from the line of Caio Ribeiro with Think of America. Your line is open. Good morning, everyone.

Speaker Change: And as a reminder, if you would like to ask a question, please press star and the number one on your telephone keypad.

Caio Ribeiro: Our first question comes from the line of Caio Ribeiro: would think of America, your mind is open. Good morning, everyone. Thanks for the opportunity. So my first question is more market-related.

Speaker Change: Our first question comes from the line of Caio Ribeiro with Think of America. Your line is open.

Caio Burger Ribeiro: Thanks for the opportunity. So my first question is more market-related. I just wanted to see if you could provide an update on HRC prices in the U.S., which have been under pressure over the last month, and whether you see any green shoots emerging ahead, which could support a rebound. And then secondly, more specific to Musa, I just wanted to see if you have any updates on that front, any revised CapEx expectations regarding, you know, that potential expansion at the Musa asset and when you would expect to take a decision on that project or not.

Caio Burger Ribeiro: And then on a similar note, you know, still related to Musa, with the recent correction in iron ore prices to $100 per ton, whether there would be, you know, any changes to your planned production levels in the asset. And if not, if there would be a certain price level where you would contemplate, you know, reducing your third-party iron ore sales from that asset. Thank you. Thank you, Caio, for your questions. The first one, prices in North America or in the U.S. I mean, I said it in my initial remarks. Hot Rod Coils in the U.S. were down to around 7,000.

Caio Burger Ribeiro: Good morning, everyone. Thanks for the opportunity.

Maximo Vedoya: $100 per metric ton by the end of last month. But we are seeing today that these prices... By the end of July, not by the end of last month, by the last week, I think. But we are seeing increasing prices. So we feel that this is the bottom of the price.

Maximo Vedoya: I just wanted to see if you could provide an update on HRC prices in the US, which have been under pressure over the last month, and whether you see any green shoots emerging ahead, which could support a rebound. And then secondly, more specific to Mousa, I just wanted to see if you have any updates on that front, any revised capex expectations regarding that potential expansion, that's the Mousa asset. And when you would expect to take a decision with that project or not. And then, on a similar note, still related to Mousa, with the recent correction in iron ore prices to $100 per ton, whether there would be any changes to your plan production levels and the asset.

Caio Burger Ribeiro: So my first question is more market-related. I just wanted to see if you could provide an update on HRC prices in the U.S., which have been under pressure over the last month, and whether you see any green shoots emerging ahead which could support a rebound.

Caio Burger Ribeiro: And then secondly, more specific to Moussa, I just wanted to see if you have any updates on that front.

Caio Burger Ribeiro: Any revised CAPEX expectations regarding, you know, that potential expansion at the MUSEA asset?

Speaker Change: and when you would expect to take a decision with that project or not.

Speaker Change: And then on a similar note, you know, still related to Moussa, with the recent correction in iron ore prices to $100 per ton,

Maximo Vedoya: And if not, if there would be a certain price level where you would contemplate reducing your third party iron ore sales from that asset. Thank you.

Speaker Change: Whether there would be, you know, any changes to your planned production levels and the asset and if not, if there would be a certain price level where you would contemplate, you know, reducing your third-party iron ore sales from that asset. Thank you.

Maximo Vedoya: Thank you, Caio, for your questions. The first one, prices in America or in the US, I mean, I said it in my initial remarks. A couple of coils in the US were down to around $700 per metric ton by the end of last month. But we are seeing today that this price is by the end of July, not last month, by the last week, I guess. But we are seeing increasing prices. So we feel that this is a bottom of the price. Of course, in our pricing, some part of this you are not going to realize it in the third quarter because of the lack of the contract part of our business.

Speaker Change: Thank you, Caio, for your questions.

Speaker Change: prices in North America or in the U.S.

Speaker Change: I mean, I said it in my initial remarks.

Speaker Change: Hot Rod Coils in the U.S. were down to around $7,000.

Speaker Change: hundred dollars per metric ton by the end of last month

Speaker Change: But we are seeing today that these prices...

Speaker Change: By the end of July , not last month, by the last week, I guess.

Speaker Change: We are seeing increasing prices, so we feel that this is a bottom of the price. Of course, in our pricing, some part of this you are not going to realize in the third quarter because of the lack of the contract part of our business.

Maximo Vedoya: Of course, in our pricing, some part of this, you are not going to realize it in the third quarter because of the lack of the contract part of our business, but yes, we are seeing this to be the bottom part, and we are seeing some indication that this is coming up. In the medium or long term, as I have always said, I think that demand, both in the US and in Mexico, is still very strong in different sectors.

Maximo Vedoya: But yes, we are seeing this to be the bottom part, and we are seeing some indication that this is coming up.

Speaker Change: But, yes, we are seeing this...

Speaker Change: to be the bottom part and we are seeing some...

Maximo Vedoya: In a more medium-along term, as I always said, I think that demand both in the US and in Mexico is still very strong in different sectors. But I see Mexico, although it grew by 14% last year, the apparent consumption of steel is still growing in Mexico. And I see robust demand in the US. Again, I think that what impact prices the last couple of months was the excess production of China, which that production, you know, for the last five or six months, China has been on a record of export of steel. And this is coming down, and it has to come down.

Speaker Change: Some indication that this is coming up.

Speaker Change: In a more medium or long term, as I always said, I think that demand, both in the U.S. and in Mexico, is still very strong.

Maximo Vedoya: But I see Mexico, although it grew by 14% last year, the apparent consumption of steel is still growing in Mexico, and I see robust demand in the U.S. Again, I think that what affects prices... The last couple of months was the excess production of China, which that production, you know, for the last five or six months, China has been on a record export of steel. And this is coming down, and it has to come down.

Speaker Change: In different sectors, but I see Mexico, although it grew by 14% last year, the apparent consumption of steel, is still growing in Mexico and I see robust demand in Mexico.

Speaker Change: In the U.S., again, I think that what impact prices...

Speaker Change: The last couple of months was the excess production of China, which that production, you know, for the last five or six months, China has been on a record of export of steel.

Maximo Vedoya: It's not that this volume is coming to the U.S. or Mexico, but clearly, this is affecting other markets, which then are shipping to Mexico and the U.S. So, on the bottom, I think, yes, it is a bottom, and we are seeing clear evidence that prices are going up and will be going up in the near future. I hope with this, Caio, I have answered your question. The first one, at least.

Maximo Vedoya: It's not that this volume is coming to the US or Mexico, but clearly this is affecting other markets which don't are shipping to Mexico and the US. So, on the bottom, I think yes, it is a bottom and we are seeing clear evidence that prices are going up and will be going up in the near future. I hope with this guy, I answer your question. The first one, at least. Yes, definitely that's very clear.

Speaker Change: And this is coming down, and it has to come down. It's not that this volume is coming to the U.S. or Mexico.

Speaker Change: But clearly, this is affecting other markets, which then are shipping to Mexico and the U.S. So, on the bottom, I think, yes, it is a bottom, and we are seeing clear evidence that prices are going up and will be going up in the near future.

Speaker Change: I hope with this, Caio, I answered your question.

Maximo Vedoya: Yes, definitely. That's very clear. Thank you, Maximo. Perfect. Sencon, MUSA, I think we took this in the past, but I don't remember, but the decision on the MUSA project should be taken by the end of next year. We are working on the project, we are working on all the things that we are advancing, engineering, which will be the technology, the permission, the, Yes, all the permissions that we need, the scope of the project, there is a team working on everything.

Caio Burger Ribeiro: The first one, at least.

Operator: Thank you, Maximo. Perfect.

Speaker Change: Yes, definitely. That's very clear. Thank you, Maximo. Perfect. Sencon, MUSA. I think we talked in the past, but I don't remember. But the decision of the MUSA project should be taken by the end of next year.

Maximo Vedoya: We're all advancing in all the things that we can advance in engineering, which will be the technology, the permission, the... Yes, all the permissions that we need, the scope of the project, there is a team working in everything. But the decision, we are not going to make the decision this year; probably it should be by the end of next year. And according to the production, we are not seeing today a huge decline in production. As you well mentioned, prices have been a little bit volatile, but they are decreasing to 100. They are going up a little bit, then decreasing against 100, then going up a little bit.

Speaker Change: Yes, all the permissions that we need, the scope of the project, there is a team working in everything. But the decision, we are not going to make the decision this year, probably it should be...

Maximo Vedoya: But the decision, we are not going to make the decision this year; probably it should be... by the end of next year. And regarding production, we are not seeing today a decline or a huge decline in production. As you mentioned, prices have been a little bit volatile, but they are... Decreasing to $100, then going up a little bit, then decreasing again to $100, then going up a little bit. So, it seems that $100 is kind of the bottom of the spectrum of the prices of Aranor. It's not the price that we are comfortable with, very, very comfortable, but MUSA can work with that price.

Speaker Change: by the end of next year.

Speaker Change: And regarding the production, we are not seeing today a decline or a huge decline in production. As you well mentioned, prices have been a little bit volatile, but they are...

Speaker Change: Decreasing to $100, then going up a little bit, then decreasing again to $100, then going up a little bit. So it seems that $100 is kind of the bottom of the spectrum of the prices of Aranor. It's not the price that we are...

Maximo Vedoya: So it seems that 100 is kind of the bottom of the spectrum of the prices of our north. It's not the price that we are very, very comfortable, but Musa can work with that price. So we are not expecting a huge decline in volumes in Musa, but probably a part, or a small part. We are revising the multinal cost of some of the production of Musa, but it shouldn't be a huge. Thank you, Maximo. That's super clear. I appreciate it. You're welcome, Kaido.

Maximo Vedoya: So we are not expecting a huge decline in volumes in MUSA, but probably. In part, or a small part, we are revising the marginal cost of... Some of the production of Musa, but it shouldn't be huge. Thank you, Maximo. That's super clear. I appreciate it. You're welcome, Cairo.

Speaker Change: very very comfortable but Musa can work with that price so we are not expecting a huge decline in volumes in Musa but probably

Speaker Change: A small part, we are revising the marginal cost of...

Speaker Change: Some of the production of MUSA, but it shouldn't be huge.

Speaker Change: Thank you, Maximo. That's super clear. I appreciate it. You're welcome, Cairo.

Carlos Alba: And the next question comes from the line of Carlos de Alba with Morgan Stanley. Your line is open. Yeah, good morning, good morning, everyone. Thank you very much. Just a question, Maximo, maybe on the 25% importeries that the U.S. put on Mexican expression to the U.S., that are not melted in the country.

Carlos De Alba: And the next question comes from the line of Carlos de Alba with Morgan Stanley. Your line is open. Yeah, good morning. Good morning, everyone.

Speaker Change: And the next question comes from the line of Carlos de Alba with Morgan Stanley . Your line is open. Yeah, good morning. Good morning, everyone. Thank you very much. Just a question, Maximo, maybe on the

Carlos De Alba: Thank you very much. So a question, Maximo, maybe on the 25% import tariffs that the U.S. put on Mexican steel exports into the U.S. that are not melted in the country. The 25% exemption for Brazil, is that official and a done deal? Or is it still subject to negotiations and a final decision? Because I haven't really seen an official document or announcement. And, in fact, there is talk that maybe the U.S. officials are having cold feet. Hello. Good morning, Carlos. I think it's official.

Speaker Change: The 25% import tariffs that the U.S. put on Mexican steel exports into the U.S. that are not melted in the country.

Maximo Vedoya: The 25%, the exemption for Brazil, exemption for Brazil, is that official and a don't deal or is still subject to negotiations and a final decision because I haven't really seen an official document or announcement. And in fact, there is talk that maybe the U.S. Officials are having coffee on that.

Speaker Change: The 25%, the exemption for Brazil,

Speaker Change: Is that official and a done deal?

Speaker Change: We are still subject to negotiations and a final decision because I haven't really seen an official document or announcement and in fact there is talk that maybe

Speaker Change: The U.S. officials are having cold feet on that.

Maximo Vedoya: I mean, the president of Mexico announced it, so I don't know. And then there is a formal proclamation from the Mexican government saying this, so I guess it is effective.

Maximo Vedoya: Hello, good morning, Carlos.

Maximo Vedoya: I think it's official. I mean, the President of Mexico announced it. So I don't know. And then there is a format location from the Mexican government saying this. So I guess it is official. I think that what is happening is has to be implemented. Remember, when they announced the 25%, the implementation came what two weeks later. And I think this is happening now, but we are working on the data function. Yeah, what I'm hearing is that the U.S. officials have not have not signed up on that. And the five, the five, the Mexico Mexican president has said it doesn't necessarily mean that the U.S.

Speaker Change: Hello, good morning, Carlos. I think it's official. I mean, the president of Mexico announced it. So I don't know. And then there is a formal proclamation from the Mexican government saying this.

Maximo Vedoya: I think that what is happening has to be implemented. Remember, when they announced the 25%, implementation came two weeks later. And I think this is happening now, but we are working on the data assumption. Yeah, what I'm hearing is that U.S. officials have not, have not signed up for that. And the fact that Mexico has said it doesn't necessarily mean that the U.S. is going to follow. But anyway, I mean, something to monitor clearly because of the relevance that it will have on ternium.

Speaker Change: So I guess it is efficient. I think that what is happening, it has to be implemented. Remember, when they announced the 25%, the implementation came two weeks later, and I think this is happening now, but we are working on that assumption.

Speaker Change: Yeah, what I'm hearing is that the U.S. officials have not...

Speaker Change: I have not signed off on that and the fact that Mexican President O ç?kô Nederland uh ha said it doesn't necessarily mean that the US is going to follow. But anyway, I mean, something to monitor clearly because of the relevance that it will have on Ternium business. And then on Gun Veterinary Services and

Maximo Vedoya: did not follow.

Maximo Vedoya: But anyway, I mean, something to monitor clearly because of the relevance that it will have on turning business. And then on on us.

Carlos De Alba: And then on Ximena's... How do you see the evolution of this lawsuit from CSN? Can you mention a little bit in your prepared remarks, but if you could elaborate a little bit more on what the next steps would be? And that would be one point. And the second point on the same topic is apparently that there is a court decision that is forcing CSN to sell the shares that they own in Usimina in the short term, I guess.

Maximo Vedoya: How do you see the evolution of these lawsuits from CSN? Can you mention a little bit on your preparation, Marcio? But if you can elaborate a little bit more on why would be the next steps? And that would be one point, and the second point on the same topic is, apparently there is a court decision that is forcing CSN to sell the shares that they own in Usiminas in the short term, I guess. Would Ternium negotiate with CSN and acquire those shares? Is that a possibility, or are you not interested in increasing further your stake in Useminas at this time?

Speaker Change: What, how do you see the...

Speaker Change: The evolution of this lawsuit from CSN. Can you mention a little bit on your prepared remarks, but if you can elaborate a little bit more on what would be the next steps?

Speaker Change: And that will be one point. And the second point on the same topic is, apparently, there is a court decision that is forcing...

Speaker Change: CSN to sell the shares that they own in Usiminas in the short term, I guess, would Ternium

Carlos De Alba: Negotiate with CSN and acquire those shares. Is that a possibility, or are you not interested in increasing your stake further in Simina's addition? Okay, I'll answer the second question first: Cairo, no, Carlos, Cairo, sorry, Carlos, the same letter, at least.

Speaker Change: negotiate with CSN and acquire those shares? Is that a possibility, or you are not interested in increasing further your stake in Simina's at this time?

Maximo Vedoya: Okay, I answer the second question first, Caio. Carlos, sorry, Carlos. The second part of that question, the answer is no. And the first part of the question regarding the statins of the S.A. I mean, this is a process that is ongoing right now, this week and the following week. So, to be honest, I prefer not to add much more of what I have said already in my prepared remarks, because I mean, as I said, it's something that is ongoing and there's a lot of things going on. So, I stick to what I said in my initial remarks, Carlos. I hope you understand.

Caido: Okay, I answer the second question first, Caido, no, Carlos, Caido, sorry Carlos, the same letter, at least. The second part of that question, the answer is no.

Maximo Vedoya: The second part of that question, the answer is no. And the first part of the question regarding the status of CSN Ternium, Judicia Prosses, let me say that... I mean, this is a judicial process that is ongoing right now, this week, and the following week.

Speaker Change: And the first part of the question regarding the status of the CSN-Ternium judicial process...

Speaker Change: Let me say that...

Speaker Change: [inaudible]

Maximo Vedoya: So, to be honest, I prefer not to add much more to what I have said already in my prepared remarks, sponsored ADR, in my initial remarks. Carlos, I hope you understand. Yeah, no, for sure.

Speaker Change: because, I mean, as I said, it's something that is ongoing and there's a lot of things going on. So I stick to what I said.

Carlos Alba: Yeah, I know, for sure.

Carlos De Alba: And then just a follow-up on the first part of my second question. Why wouldn't Ternium negotiate with CSA and Modus Imminensis? If you can add any color there, that would be great.

Speaker Change: in my initial remarks. Carlos, I hope you understand. Yeah, no, for sure. And just a follow-up on the first part of my second question. Why wouldn't Ternium negotiate with CSA and Modus Immina shares? If you can add any color there, that would be great.

Maximo Vedoya: And then just a follow-up on the first part of my second question, why wouldn't Ternium negotiate with CSN more Usiminas shares? If you can add any color, that would be great. Carlos, first of all, as you know, this is a process that you write. It's growing on in Brazil, but the persons in Brazil are long. So, we cannot count that this will be the case immediately. So, we are not in the position to say what will happen and what we will do in respect to that. So, it's happening in Brazil, but it's nothing that we can do at this moment.

Pablo Daniel Brizzio: Hi Carlos, this is Pablo. First of all, as you know, this is a process that, you're right, is going on in Brazil, but the process in Brazil, uh..., going along. We cannot count on that this will be the case immediately, so we are not in any position to say what will happen and what we will do with respect to that. It's happening in Brazil, but there's nothing that we can do at this time

Speaker Change: and what we will do with respect to that. So, it's happening in Brazil, but it's nothing that we can do at this moment.

Carlos Alba: Okay, thank you, Carlos.

Pablo Daniel Brizzio: Okay. Thank you, Pablo. Thank you, Carlos. Thank you, Maximo. Bye. And your next question comes from the line of Timna Tanners with Wolfay Research. Your line is open. Hey, good morning.

Maximo Vedoya: Thank you, Maximo.

Timna Tanners: And your next question comes from the line of Tim Nutaners: will we'll pay research? Your line is open. Yeah, hey, good morning. Regarding the situation with the resilient, imported flab, it's all very interesting, but at the end of the day, does it really matter that much for Ternium, if indeed, as you pointed out very nicely, Mexico doesn't export that much to the U.S. And also, seems like you're pretty busy with good demand in Mexico. Lots of archiving that isn't going to produce much in the third quarter, if any. Are you thinking opportunities to take share?

Speaker Change: And your next question comes from the line of Timna Tanners with Wolfay Research. Your line is open.

Timna Beth Tanners: Regarding the situation with the Brazilian imported slabs, it's all very interesting, but at the end of the day, does it really matter that much for Ternium if, indeed, as you pointed out very nicely, Mexico doesn't export that much to the U.S.? And also, it seems like you're pretty busy with good demand in Mexico. Lázaro Cárdenas isn't going to produce much in the third Are you seeing opportunities to take shares? Can you talk a little bit more about any opportunities from AMSA potentially declaring bankruptcy? Thank you, Pimna.

Speaker Change: It's all very interesting, but at the end of the day, does it really matter that much for Ternium if indeed, as you pointed out very nicely,

Speaker Change: Seems like you're pretty busy with good demand in Mexico.

Speaker Change: Lázaro Cárdenas isn't going to produce much in the third quarter, if any. Are you seeing opportunities to take shares? Can you talk a little bit more about any opportunities from AMSA potentially declaring bankruptcy? Thanks.

Maximo Vedoya: Can you talk a little bit more about any opportunities from and subsequently declining? Thank you, Timna. You are a little bit right, but of course, nobody likes to have something taken away. And remember, we are not the only ones exporting to the US. So, I mean, the sense is having a restriction in the export from Mexico to the US, for the method from Brazil. When both countries, the US and Mexico, both imports left from the US from Brazil, sorry, from Brazil, doesn't make any sense. It's clearly for more; the volume is maybe not big volume as a volume as a whole in Ternium, but it's a volume important for what Mexico exports to the US.

Maximo Vedoya: You are a little bit right, but of course, I mean, nobody likes to have something taken away. I mean, and remember, we are not the only ones exporting to the U.S. So, I mean, the sense is having a restriction on the export from Mexico to the U.S. for the melted and poured from Brazil when both countries, the U.S. and Mexico. Both imports left from the U.S., from Brazil, don't make any sense. It's clearly, uh... For more, the volume is maybe not a big volume as the volume as a whole in terms of termium, but it's a volume important for what Mexico exports to the U.S. So I am putting in a restriction.

Speaker Change: Thank you, Tina.

Speaker Change: You are a little bit right, but of course, I mean, nobody likes to have a...

Speaker Change: Both imports left from the U.S.

Speaker Change: From Brazil, sorry. From Brazil. Doesn't make any sense.

Speaker Change: It's clearly...

Speaker Change: For more, the volume is maybe not big volume as the volume as a whole in Ternium, but it's a volume important for what Mexico exports to the U.S., so putting a restriction.

Maximo Vedoya: So, putting a restriction, small as it may be, from the US, from the Mexico to the US, when the US exports that much more to Mexico, it doesn't make any sense. And that's our position, to be honest. You're right that, compared to all the volume that Mexico sells and our opportunities in the domestic market, is not that big, but we need to fulfill our customers in the US also. So, that's the first part of the question.

Maximo Vedoya: Small as it may be, from the U.S. to Mexico, and when the U.S. exports that much more to Mexico, it doesn't make any sense, our position, to be honest. You're right that, compared to all the volume that Mexico sells and our opportunities in the domestic market, it is not that big, but we need to satisfy our customers in the U.S. also. That's the first part of the question. You asked something about AMSA.

Speaker Change: From the U.S. From Mexico to the U.S.

Speaker Change: It doesn't make any sense, and that's...

Speaker Change: Our position, to be honest. You're right.

Speaker Change: It's not that big, but we need to fulfill our customers in the U.S. also.

Speaker Change: So that's the first part of the question. You asked something about AMSA. To be honest, we don't know much of AMSA besides what's in the press.

Maximo Vedoya: You have something about ANSA. To be honest, we don't know much of ANSA, besides what in the press, that supposedly there's a deadline for the, I think it's a fourth of August, where ANSA should go to the bankruptcy process because there was no agreement. Nevertheless, I think it's still a long process; the bankruptcy process is not going to be something immediate. I mean, there's a; it's not a very easy bankruptcy process.

Maximo Vedoya: To be honest, we don't know much about AMSA besides what's in the press, that supposedly there's a deadline for the 4th of August, where ANSA should go into the bankruptcy process because there was no agreement. Nevertheless, I think it's still a long process, the bankruptcy process. It's not going to be something immediately. I mean, it's not a very easy bankruptcy process.

Speaker Change: that supposedly there's a deadline for the, I think it's the 4th of August .

Speaker Change: where ANSA should go to the bankruptcy process because there was no agreement.

Speaker Change: Nevertheless, I think it's still a long process, the bankruptcy process. It's not going to be something immediately. I mean, it's not a very easy bankruptcy process.

Timna Tanners: Got it. Thank you. So, I recognize it's more about the principle. That's a really fair point.

Speaker Change: Got it. Thank you. So, I recognize it's more about the principal. That's a really fair point. If you could also touch on any opportunity with Lázaro Cárdenas, and then if I could, a second question.

Timna Beth Tanners: If you could also touch on any opportunity with Lacero Cardenas. And then, if I could, a second question. If the price in the U.S. is just starting to stabilize here for September, is that still enough to help the fourth quarter cadence for pricing? Just because I'm trying to think about the timing.

Maximo Vedoya: If you could also touch on any opportunity with lots of cardinets. And then, if I could ask a second question. It's a price in the US is just starting to stabilize here for September. Is that still enough to help the fourth quarter cadence for pricing? Just because I'm trying to think about the timing. And if you could also talk about the magnitude of the margin opportunity with some of the raw materials decreases. Thanks. Yeah, I think the price is in the fourth quarter. Yes, should improve, sorry, because of the decrease in the prices that we are starting to see this week.

Speaker Change: If the price in the U.S. is just starting to stabilize here for September , is that still enough to help the fourth quarter cadence for pricing? Just because I'm trying to think about the timing and if you could also talk about the magnitude of the, you know, margin opportunity with some of the raw materials decreases. Thanks.

Maximo Vedoya: And if you could also talk about the magnitude of the margin opportunity with some of the raw materials decreases. Thanks. Yeah, I think the prices in the fourth quarter should improve, should improve, sorry, because of this increase in prices that we are starting to see this week and should continue a little bit through this month and the following month. So, yes, the magnitude of the increase is very difficult to say right now.

Speaker Change: Yes, should improve, should improve, sorry.

Maximo Vedoya: And should continue a little bit through this month and the following month. So yes, the magnitude of increase; it's very difficult to say right now. I always said that a normal price in the North American region should be between 800 and 900. Of course, with the volatility, we are accustomed. to. So, I mean, that's our view, but I don't say I'm not saying that that is going to be in the fourth quarter yet, but it's going to be increased. Okay.

Speaker Change: So, yes, the magnitudes of the increase, it's very difficult to say right now, Timna. I always said that a normal price in the North American region should be between $800 and $900. Of course, with the volatility we are accustomed to.

Maximo Vedoya: I always said that a normal price in the North American region should be between $800 and $900, of course, with the volatility we are accustomed to. I mean, that's our view, but I don't say I'm not saying that that is going to be in the fourth quarter yet, but it's going to be higher. Okay, hi, team, my name is Pablo.

Pablo Rocca: Hi, Timna Tanners, Pablo. You asked in relationship to the possibility of the recovery, the ability of the Martians entering into the fourth quarter. As we always try to say, it's always a volatility could be there, but in the long run we should be achieving a certain level of much. If you two together, the first semester of this year we are still at the level of 15%. So, clearly we have a reaction during the percorta, because of all the things that we said, and if the prices that you mentioned and maximum confirm are increased and these are reflected together with some reaction in cost that we need to see during the fourth quarter, because on the 13th or $1,000 we utilize should recover our Martians to a higher level than what we see or what we receive in the third quarter.

Pablo Daniel Brizzio: You asked in relation to the possibility of the recoverability of the margins entering into the fourth quarter. As we always try to say, volatility could always be there, but in the long run, we should be achieving a certain level of margins. If you take together the first semester of this year, we are still at 15%.

Speaker Change: As we always try to say, always the volatility could be there, but in the long run, we should be achieving a certain level of margin. If you took together the first semester of this year, we are still at the level of 15%.

Pablo Daniel Brizzio: So clearly, we had a reduction during the third quarter because of all the things that we said, and if the prices that you mentioned, and Maximo confirmed, are increased, and these are reflected together with some reduction in cost that we need to see during the fourth quarter because of the first thing, the first methodology that we utilize, should recover our margins to a higher level than what we see or what we receive in the third quarter. So, yes, we do have a chance to recover.

Speaker Change: So, clearly we have a reduction during the third quarter because of all the things that we said. And if the prices that you mentioned and Maximo confirmed are increased and these are reflected together with some reduction in cost that we need to see during the fourth quarter because of the first-year infrastructure methodology that we utilized.

Speaker Change: Should recover our margins to a higher level than what we see or what we receive in the third quarter. So yes, we have the chance to recover and at the full year after all these effects, if we are correct, should position us in a very reasonable level of margins.

Pablo Rocca: So, yes, we have the chance to recover another at a few years after all this effect is we are correct. Should position us in a very reasonable level of notion.

Pablo Daniel Brizzio: And at the full year after all these effects, if we are correct, should position us at a very reasonable level of... Let me add something more, because I don't want to sound like I'm talking about the U.S. and the Mexican poor. I mean Mexico, and this is not Ternium, Mexico as a whole... Something I want for you, 1.4 million tons of F.L.A.T. products, which is finishing F

Maximo Vedoya: Timna, let me add something more, because I don't want to sound with this problem of the U.S. and Mediterranean pool. I mean, Mexico, and this is not Mexico as a whole. Export something like 1.2, 1.4 million tons of flat products, which is the finishing flat products around that 1 million, 1.2. Of that, more than in volume or in price, something like half of that comes from not melted and pool. So, semi-finished products, labs that come from different parts, some of them from Brazil. It's not a huge volume, but it's very important for what Mexico exports to the U.S.

Speaker Change: Let me add something more because I don't want to sound with this problem of the U.S. and Mexico. I mean, Mexico, and this is not Ternium, Mexico as a whole, export...

Speaker Change: something like one point

Maximo Vedoya: Products, around that $1,000,001.2. Of that, more than in volume or in price, something like half of that comes from Not Melted and Poor, so semi-finished products, slabs that come from different parts, some of them from Brazil. It's not a huge volume, but it's very important for what Mexico exports to the U.S. So, it doesn't make any sense to have this restriction on, as I said, the numbers I said before in my remarks.

Speaker Change: to 1.4 million tons

Speaker Change: of flat products, which is finishing flat products around that 1,000,001.2. Of that,

Speaker Change: More than in volume or in price.

Speaker Change: something like half of that comes

Speaker Change: from Not Melted and Poor. So semi-finished products, laps, that come from different parts, some of them from Brazil.

Speaker Change: It's not a huge volume, but it's very important for what Mexico exports to the U.S. So it doesn't make any sense to have...

Timna Tanners: So, it doesn't make any sense to have this restriction in, as I said, the numbers I said before in my remarks. Got it. Okay, thank you.

Speaker Change: [inaudible]

Operator: You're welcome.

Speaker Change: Got it. Okay, thank you again.

Leocora: And your next question comes from the line of Monthly O'Fourad with Goldman Facts. Your line is open. Thank you.

Maximo Vedoya: Got it. Okay, thanks again. You're welcome. And your next question comes from the line of Marcio Farrad with Goldman Sachs. Your line is open.

Speaker Change: You're welcome.

Speaker Change: And your next question comes from the line of Marcio Farrad with Goldman Sachs. Your line is open.

Marcio Farid Filho: Thank you. Good morning, Maximo, and Pablo. Thanks for the opportunity.

Leocora: One is for maximum and probable things for the opportunity. I have a question on the demand trial. You always mention the demand is quite strong, both in the U.S. and in Mexico as well. Shipments for the quarter relative in the week. My understanding is that that's basically bias holding back purchase from a declining price environment. Just wanted to check if you've already seen clients coming back and buying into our agency from the initial sign of prices that the organization has potentially injected in Mexico as well.

Marcio Farid Filho: Thank you. Good morning, Maximo.

Marcio Farid Filho: and Pablo. Thanks for the opportunity. I have a question on the demand side. You obviously mentioned that demand is quite strong, both in the U.S. and in Mexico as well.

Speaker Change: Shipments for the quarter were relatively weak. My understanding is that that's basically buyers holding back purchases on a declining price environment. Just wanted to check with you if you're already seeing, you know,

Speaker Change: I think clients coming back and buying, since you have already seen some initial signs of

Speaker Change: of flight system utilization and potentially HRT price recovery as well.

Leocora: And secondly, just a follow-up on the taxation risk. I know you've talked a lot about the interdependence between U.S. and Mexico for the trade flows. I feel like U.S. is a lot more aggressive than Mexico is at the moment right now. But we should let elections just roll in the corner. What are the potential risks you are expecting? You know, that is just even suggestion by one of our competitors that you have made sure there and then you start off. But I mean, what are the kind of potential risks you're seeing on the middle of the US administration into next year?

Speaker Change: What are the potential risks you are assessing? There was even suggestions by one of our competitors that UFCMA should end and this kind of thing. But I mean, what are the kind of potential risks you are seeing?

Maximo Vedoya: Thank you.

Speaker Change: on a new U.S. administration into next year, please. Thank you.

Pablo Rocca: Thank you, Marcio.

Marcio Farid Filho: I have a question on the demand side. You obviously mentioned that demand is quite strong both in the U.S. and in Mexico as well. However, shipments for the quarter were relatively weak.

Maximo Vedoya: The first part of the question, the month? Yes, we are seeing a pick up in Mexico. But of that is also because for external for different reasons. Also, we ship a little bit less than what we should have shipped in the second quarter, not only because of the demand, but also because of the tormental vector. We were two weeks with a lot of problems. Also, the slap shipments from Brazil to Mexico also had problems because of all time. Because of the brown field port and some other issues, and the problem we have with the last one, is so we are seeing both things.

Speaker Change: Thank you, Marcio. The first part of the question. Demand, yes, we are seeing a pickup in Mexico. Part of that is also because for external, for different reasons.

Speaker Change: Also, we ship a little bit less than what we should have shipped in the second quarter. Not only because of the demand, but also because of the Tormenta Alberto. We were two weeks.

Speaker Change: with a lot of problems, also the slap.

Speaker Change: Shipments from Brazil to Mexico also had problems because of the Brownsville port and some other issues and the problem we have with the blast furnace. So we are seeing both things. A pickup in our shipments because of this and a pickup of our shipment because.

Maximo Vedoya: A pick up in our shipments because of this and a pick up of our ship because people are realizing the ones that have stocks that prices are starting to go up. So both things we are seeing, as you mentioned.

Maximo Vedoya: My understanding is that that's basically buyers holding back purchases in a declining price environment. Just wanted to check with you if you're already seeing, you know, clients coming back and buying, since you have already seen the initial signs of... Taxation risk.

Speaker Change: People are realizing, the ones that had stocks, that prices are starting to go up. So both things we are seeing.

Maximo Vedoya: Regarding US Mexico and USMCA, I mean, I don't see, I mean, my view, it's going to be the same regardless of who is in the US government. I think Mexico and US relationship, it's a very strong one and it's both sides. I mean, I don't see; I mean, I see the USMCA as an excellent agreement for the three countries, not only for Mexico, for Canada, or for the US. The three countries has benefit a lot from the US, from the USMCA. I mean, if you put also, let me give you some advice, but there's a lot of evidence about this.

Speaker Change: As you mentioned, regarding U.S.-Mexico and USMCA, I mean, I don't see...

Marcio Farid Filho: I know you've talked a lot about the interdependence between the U.S. and Mexico, about the trade flows, and it does feel like the U.S. is a lot more aggressive than Mexico is at the moment, right? But we see U.S. elections just around the corner. What are the, you know, potential risks you are assessing?

Speaker Change: I mean, my view is going to be the same regardless of who...

Maximo Vedoya: Um, you know, there have been suggestions by one or four competitors that U.S. CMA should end and this kind of thing, but I mean, what are the kind of potential risks you're taking on a new U.S. administration into next year, please. Thank you, Marcio. The first part of the question, the month, yes, we are seeing a pickup in Mexico. Part of that is also because, externally, for different reasons. Also, we shipped a little bit less than we should have shipped in the second quarter, not only because of the demand but also because of Tormenta Alberto. We were two weeks with a lot of problems.

Maximo Vedoya: Also, the slap, Sponsored ADR, as you mentioned. Regarding... Thank you. U.S., Mexico, and USMCA. I mean, I don't see it. I mean, my view is going to be the same regardless of who in the U.S. government.

Speaker Change: is in the U.S. government. I think Mexico and U.S. relationship, it's a very strong one and it's both sides.

Maximo Vedoya: I think Mexico and the U.S. relationship is a very strong one, and that's from both sides. I mean, I don't see, I mean, I see the USMCA as an excellent agreement for the three countries, not only for Mexico, for Canada, or for the U.S. The three countries have benefited a lot from the U.S., from the USMCA. I mean, if you put those together, let me give you some advice, but there's a lot of evidence about this.

Speaker Change: I mean, I don't see, I mean, I see the USMCA as an excellent agreement.

Speaker Change: For the three countries, not only for Mexico, for Canada, or for the U.S., the three countries have benefited a lot from the U.S., from the USMCA. I mean, if you put those, let me give you some advice, but there's a lot of evidence about this.

Maximo Vedoya: But if you take from 2019 to 2023, exports from the US to Mexico increased by 26%. So export of the US, and this is only in the end, in goods, not services, which is much more. 26%, Mexico also increased export to the US by 30%, but both numbers are similar. So both countries are benefiting a lot from that. You take the states of the US. So these three states in the US have Mexico as one of the top destinations of the records. I don't know, jobs. There's a lot of evidence and different jobs of the millions of jobs the USMCA has created in the US.

Maximo Vedoya: But... If you take from 2019 to 2023, exports from the U.S. to Mexico increased by 26%. So export to the U.S., and this is only in goods, not services, which is much more, 36%. Mexico also increased export to the U.S. by 30%, but both numbers are similar. So both countries are benefiting a lot. From that, you take the states of the U.S. Thirty-three states in the U.S. have Mexico as one of the top destinations of their exports.

Speaker Change: to 2023, exports from the U.S. to Mexico increased by 26%.

Speaker Change: So, export of the U.S., and this is only in goods, not services, which is much more, 36%. Mexico also increased export to the U.S. by 30%, but both numbers are similar.

Speaker Change: So, both countries are benefiting a lot.

Speaker Change: From that, you take the states of the U.S., 33 states in the U.S. have Mexico as one of the top destinations of their exports.

Maximo Vedoya: I don't know about jobs. There's a lot of evidence and different estimates of the millions of jobs the USMCA has created in the US. All right, so... I don't see that. Somebody would think of changing or cancelling the USMCA with all the benefits that this is bringing to Mexico and to the US. I think there are some things that we can improve, for sure. But others, no.

Speaker Change: Bye.

Speaker Change: I don't know, jobs. There's a lot of evidence and different jobs of the millions of jobs the USMCA has created in the US. So,

Maximo Vedoya: So I don't see that somebody would think of changing or can selling the USMCA with all the benefit that this is bringing to Mexico and to the US.

Speaker Change: I don't see...

Speaker Change: that

Speaker Change: somebody would think of changing or cancelling the USMCA with all the benefits that this is bringing to Mexico and to the U.S.

Maximo Vedoya: I think there are some things that we can improve for sure.

Speaker Change: I think there are some things that we can improve for sure, but others, no. The other issue that you didn't mention it, but it's very mentioned in the press, is the Chinese investment in Mexico as a reason of...

Maximo Vedoya: But others know, the other issue that you didn't mention it, but it's very mentioned in the press, is the Chinese investment in Mexico as a reason of... I don't know, putting in doubt the US and C.A. But the numbers, again, they are not there. I mean, there are some Chinese companies invest in Mexico, as there are some Chinese investments in the US. But if you take the following direct investment that China made in Mexico, I'm not one year. I put the last four years, 2020 to 2023; it's less than 1% of the FDA. It's a day of all Mexico, so it's insignificant.

Maximo Vedoya: The other issue that you didn't mention, but it's very much mentioned in the press, is the Chinese investment in Mexico as a reason of..., um, I don't know, putting in doubt the USMCA. But the numbers, again, are not there. I mean, there are some Chinese companies investing in Mexico, as there are some Chinese investments in the U.S.

Speaker Change: [inaudible]

Maximo Vedoya: But if you take the foreign direct investment that China made in Mexico, and not for one year, I put the last four years, 2020 to 2023, it's less than 1% of the GDP of all Mexicans. So it's insignificant. Yes, there are some companies coming, but the numbers are very, very small. So there's not an invasion on anything of that. Again, that the U.S. is also receiving foreign direct investment from China, and in much bigger numbers.

Speaker Change: China made in Mexico, and not one year, I put the last 4 years, 2020 to 2023, it's less than 1% of the FDA of all Mexico.

Maximo Vedoya: Yes, there are some companies coming, but the numbers are very, very small, so there's not an invasion on anything of that. Again, the US is also receiving foreign direct investment from China, and much bigger numbers. But the bottom line here is, I think, it's mutually for the three countries. And yes, we have to, the three countries, make tougher loss against some third trade, not only still but in a lot of other products. We have to work together to make that possible. Thank you.

Speaker Change: So it's insignificant. Yes, there are some companies coming, but the numbers are very, very small. So there's not an invasion on anything of that.

Speaker Change: Again, that...

Speaker Change: The U.S. is also receiving foreign direct investment from China.

Maximo Vedoya: But the bottom line here is, I think it's mutual for the three countries. And yes, we have to, the three countries, make buffer laws against unfair trade, not only steel but a lot of other products. We have to work together to make that possible.

Speaker Change: and much more bigger numbers.

Speaker Change: But the bottom line here is, I think it's mutual for the three countries, and yes, we have to, the three countries, make tax laws against unfair trade, not only steel, but in a lot of other products. We have to work together to make that possible.

Alexander Hacking: And your next question comes from the line of Alex Hacking with City; your line is open. Thanks, morning. I just wanted to ask quickly on CITERA. When I look at their financial statements for the court, they seem to be reporting an operating loss, you know, and that's not including the provision. That would seem to be an underlying operating loss. Is that just FX accounting, or is there something more fundamental that's happened at CITERA? And I guess, how would you see profitability there evolving in the third quarter? And am I even correct that there wasn't an operating loss in the second quarter?

Alex Hacking: Thank you. And your next question comes from the line of Alex Hacking with Citi. Your line is open. Good morning. I just wanted to ask quickly about SIDARA.

Speaker Change: Thank you. And your next question comes from the line of Alex Hacking with Citi. Your line is open.

Alex Hacking: When I when I look at their financial statements for the quarter, they seem to be reporting an operating loss. Uh, you know, and that's not including the provision, right? So that would seem to be an underlying operating loss. Is that just... FX accounting, or is this something more fundamental that's happened, etc., and, I guess, how would you see profitability there evolving in the third quarter? And am I even correct that there was an upgrade in the second quarter?

Alex Hacking: Q. When I look at the financial statements for the quarter, they seem to be reporting an operating loss.

Speaker Change: You know, and that's not including the provision, right? So that would seem to be an underlying operating loss.

Alex Hacking: Is that just FX accounting or is this something more fundamental that's happened at Citra and I guess how would you see profitability there evolving in the third quarter? And am I even correct that there was an operating loss in the second quarter? Thanks.

Maximo Vedoya: Thanks.

Pablo Rocca: Yeah, Alex, you are kind of correct. It's almost zero. I mean, the main, the main issue, and Pablo then elaborate a little bit more, but the main issue is that the second quarter was a quarter where we, the volumes were very low. Remember, the first quarter and second quarter were the lowest level of Ternium Argentina in a long time. We are seeing now an increase in the volumes due to the situation of the Argentine market or the whole economy market, but I don't know, Pablo, if you want to elaborate a little bit more. So, you're right.

Maximo Vedoya: Thanks. Yeah, Alex, you're kind of correct. It's almost zero.

Speaker Change: Yeah, Alex, you're kind of correct, it's almost zero.

Pablo Daniel Brizzio: I mean, the main issue, and Pablo then elaborates a little bit more, but the main issue is that the second quarter was a quarter where our volumes were very low. Remember, the first quarter and second quarter were the lowest levels of Ternium Argentina in a long time. We are now seeing an increase in volumes due to the situation of the Argentine market or the whole economy market. But I don't know, Pablo, if you want to elaborate a little bit more. No, you're right, Alex. How are you? You are totally right. It was...

Speaker Change: We are seeing now an increase in the volumes due to the situation of the Argentine market or the whole economy market, but I don't know, Pablo, if you want to elaborate a little bit more. No, you're right, Alex. How are you? You are totally right.

Pablo Rocca: Alex, how are you? You are totally right. It was unfortunately not the best quarter for Ternium Argentina, because not only with maximum strain, we also had the some cost increase due to the first thing for the foreign policy that impacted all today in the same in the same quarter. Again, we discussed before in the, at the beginning, we didn't sum up the four quarters for the years. We should see a different result. We are expecting to see higher volumes during the becoming becoming quarters. We should see also some reaction in cost in the coming quarter.

Pablo Daniel Brizzio: Unfortunately, not the best quarter for Ternium Argentina because not only what Maximo explained, but we also had some costs increase due to the first-in-four-thousand methodology that impacted all today in the same quarter. Again, as we discussed before, at the very end, if we then sum up the four quarters for the years, we should see a different result. We are expecting to see higher volumes during the coming quarters. We should also see some reduction in cost in the coming quarters. So the situation that you clearly saw during the second quarter should be reversed during the third and fourth quarters.

Speaker Change: Again, as we discussed before, at the very end, if we then sum up the four quarters for the years, we should see a different result. We are expecting to see...

Speaker Change: higher volumes during the coming quarters, we should see also some reduction in cost in the coming quarters. So these situations that you clearly saw during the second quarter should be reversed during the third and the fourth quarter.

Pablo Rocca: So, the situation that you clearly saw during the second quarter should be reversed during the third and the fourth.

Pablo Daniel Brizzio: Okay, thanks. That's clear. It just caught my eye because... And your next question comes from the line of Leo Cora with BTG Pactual. Your line is open. Hello, good morning, everyone.

Speaker Change: [inaudible]

Leocora: And your next question comes from the line of Leocora with BTG Pactual; your line is open. Hello, good morning. Thanks. Yes, a couple of quick ones. More details here, but hopefully you can help a bit.

Leonardo Correa: Thanks. Yeah, so a couple of quick ones. More detail here, but... Hopefully, you can help update this. So first off, for you, Pablo, the dividend situation, right? I mean, Ternium has been consistently increasing its dividend over the past year. We're now, I mean, you guys still have... A bit of a high capex program going forward, given the projects in Expo and this somewhat messy situation with CS10 and this litigation. We still don't know exactly how this ends.

Leocora: So first on, for you, Pablo, the dividend situation, right? I mean, Ternium has been consistent with somebody in already a past world. We're now, I mean, you guys still have a bit of a high-capacity program going forward, given the project, and what. And there's a short awaited somewhat messy situation with just them on this litigation, which I don't know exactly how to send. Of course, there are; you guys have great arguments, but you never know how to predict these things. And I can imagine the high level of uncertainty. And as a consequence, you're increasing your provision, right?

Speaker Change #104: A bit of a high capex program going forward given the projects in Mexico.

Speaker Change: And there's a somewhat messy situation with Ciastran on this litigation. We still don't know exactly how this ends. Of course, you guys have great arguments, but you never know how to predict these things. And I can imagine there's a high level of uncertainty. And as a consequence, you're increasing your provisions, right? So I just wanted to double check if there's any risks that you guys re-evaluate the dividend going forward. I know this is a board decision, but anyway, just given how conservative you guys are on balance sheet management, I just wanted to double check on that.

Leonardo Correa: Of course, you guys have great arguments, but you never know how to predict these things, and I can imagine there's a high level of uncertainty, and as a consequence, you're increasing your provisions, right? So I just wanted to double-check if there's any risk that you guys re-evaluate the dividend going forward. I know this is a board decision, but anyway, just given how conservative you guys are on balance sheet management, I just wanted to double-check on that.

Pablo Rocca: So just want to take to double check if there's any risk that you got. We evaluate the different going forward. I know this is a board decision, but anyway, just given how conservative you guys are on a balance sheet management. I just want to double-check on that.

Leocora: Second point, we've been talking a lot about fuel prices over this call, clearly in the situation in China. It's a big challenge. Corporate. Not sure anything changes. It's a big fun time to have one. Looking at slab prices, basically, right? I mean, the price has obviously collapsed. Close to $500. I'm just curious to hear you on how. What's for you? How does CSA or how does 30 years ago? See the flat plan? How can it operate in this environment? I mean, what type of economics are you generating? Is the plan breached even at these levels?

Leonardo Correa: Looking at slab prices, the price has obviously collapsed close to $500. I'm just curious to hear you on how CS10, how Ternium Brazil's slab plant, how can it operate in this environment? What type of economics are you generating? Is the plant break-even at these levels?

Speaker Change #100: Close to $500. I'm just curious to hear you on how, I mean, how does CSA, how does Ternium Brazil, this lab plant, how can it operate in this environment? I mean, what type of economics are you generating? Is the plant break-even at these levels? Just wanted to hear you a bit more on that. Thank you.

Maximo Vedoya: Just wanted to hear you a bit more on that. Thank you.

Maximo Vedoya: Hi, Lero. How are you?

Pablo Rocca: Paul, you're ready? Let me start with the first question. We are in the event. We see no reason to change the what we have been doing in relationship to dividends. And let me expand a little bit on that. You mentioned a couple of things in your question. We continue to generate very positive. We have a very positive feedback.

Speaker Change #100: Hi Leo, how are you? Pablo, let me start with the first question regarding D-Day.

Speaker Change #106: and Sebastin Mart, Pablo Brizzio.

Speaker Change #101: The CAPEX plan that we have is online, on track, so nothing that could change there because that was something that was expected.

Speaker Change: [inaudible]

Maximo Vedoya: Yeah, Leo, hello. How are you?

Pablo Daniel Brizzio: I just wanted to hear you say a bit more on that. Thank you. Hi Leo, how are you?

Maximo Vedoya: Yeah, the situation of prices is especially slaps.

Maximo Vedoya: First of all, remember, Ternium is a net buyer of slaps. Ternium Plusosiminus is even greater. So, it's not about seeing the prices of slaps. Ternium Brazil sends, I mean, cells, if you can say this, everything to our own companies, either Siminas or either Ternium Mexico or either Ternium Argentina. So, we are not seeing a problem in the production of Ternium Brazil. As you know, Ternium Brazil is very efficient, so it can work at this level of prices. But again, for Ternium, as I hope, we are a net buyer of slaps.

Pablo Daniel Brizzio: Pablo, let me start with the first question regarding dividends. We see no reason to change what we have been doing in relation to dividends. Let me expand a little bit on that.

Speaker Change #107: First of all, remember Ternium is a net buyer of slabs.

Speaker Change: Ternium Plus Luciminas is even greater. So it's not a bad thing, the prices of flaps. Ternium Brazil sends...

Speaker Change: I mean, sells, if you can say this, everything to our own companies, either Usiminas, or either Ternium Mexico, or either Ternium Argentina.

Speaker Change: So, we are not seeing a problem in the production of Ternium Brazil. As you know, Ternium Brazil is very efficient, so it can work at this level of prices. But again, for Ternium as a whole, we are a net buyer of slabs.

Rodolfo Angele: And your next question comes from the line of Redolfo, Angelie. Your line is open. Hi, thanks everyone. Just wanted to confirm that, you know, the overall message from the call, in terms of outlook, was that things are bottoming; prices should be getting better in North America. But in the guidance and the release you mentioned, you did that weaker into the next quarter. So, I know there's a bit of a time in difference, but I just wonder if you could comment on this with a bit more details. That's all. Thank you.

Pablo Daniel Brizzio: You mentioned a couple of things in your question. We continue to generate very positive free cash flow, which was reflected in the numbers during this quarter and this semester. And also, even though we paid a record dividend during this first semester, the reduction in the total cash position of the company was... [inaudible] Maximo, you can take the second one. Yeah, Leo. Hello, how are you?

Speaker Change #103: And your next question comes from the line of Rodolfo Angele. Your line is open.

Maximo Vedoya: Yeah, the situation of prices, especially in slabs. First of all, remember Ternium is a net buyer of uranium, Plasmos, and Minas Gerais, so it's not a bad thing the prices have slapped. uranium Brazil sends. I mean, cells, if you can say this.

Rodolfo R. De Angele: Hi, thanks everyone. Just wanted to

Maximo Vedoya: Everything, to our own companies, either Uciminas or either Ternium Mexico or either Ternium Argentina. So, we are not seeing a problem in the production of ternium Brazil. As you know, ternium Brazil is very efficient, so it can work at this level of prices. But again, for Ternium as a whole, we are a net buyer of slabs. And your next question comes from the line of Rodolfo Angele. Your line is open. Hi, thanks everyone. Just wanted to confirm that the overall message from the call... There's a bit of a... Uh, well, yeah, I-I-I started, and then Pablo...

Rodolfo R. De Angele: confirm that, you know, the overall message from the call in terms of outlook was that things are bottoming, prices should be getting better in North America.

Rodolfo R. De Angele: but in the guidance and the release you mentioned you'd be that weaker into the next quarter so I know there's a bit of a time indifference but I just wonder if you could comment on this

Maximo Vedoya: Well, yeah, I started, and then Pablo. But yes, the message from all of you is right. Next quarter, the outlook we gave for the next quarter is the one that you just recall. Prices should decrease, especially in Mexico, because of the contract prices. Not the spot prices, but the contract prices; the lack in the contract prices. So our price overall will see probably an increase in spot prices from the ones we have in July. In June, sorry, no, June and July. But overall in the quarter, prices because of industrial prices are going to be down.

Rodolfo R. De Angele: But yes, the message, Rodolfo, you are right. Next quarter. The outlook we gave for the next quarter is the one that you should be looking at. Conte.

Rodolfo R. De Angele: But yes, the message, Rodolfo, you are right. Next quarter, the outlook we gave for the next quarter is the one that you chose.

Maximo Vedoya: Prices should decrease, especially in Mexico, because of contract prices. Not the spot prices, but the contract prices, the lack of contract prices. So our prices overall will probably see an increase in spot prices from the ones we had in June and July, but overall, in the quarter, prices, because of the industrial prices, are going to... Volume in Mexico a little bit higher, and then an increase in volume from Argentina and a little bit from Brazil. Overall, the outlook is a decrease in EBITDA regarding the second quarter. And we are seeing that this is the bottom, following this bot.

Speaker Change #105: from the ones we have in July , in June , sorry, not June and July , but overall in the quarter, prices, because of the industrial prices, are going to be down.

Pablo Rocca: Volume in Mexico a little bit higher. And then an increase in volume from Argentina and a little bit from Brazil. Overall, the outlook is as increasing the EBDA regarding the second quarter. And we are seeing that this is the bottom, and I increase following this bottom.

Speaker Change #105: [inaudible]

Pablo Daniel Brizzio: Yeah, let me add, Harold, let me add to what Maximo said that we will also be continuing to see a certain level of costs that will be reflecting the purchase price last and the purchase raw materials in the past, so it's still reflecting higher prices than what we are seeing today. That's why we mentioned that the fourth quarter should start to reflect better the scenario for Ternium, reflecting not only the price increases that we are seeing right now but also the reduction in cost that we are also seeing.

Pablo Rocca: Yeah, let me have all. For example, later, we will just maximize that, but we will also be continuing to see certain levels of cost that will be reflecting the purchase last and the purchase raw material that will be in the past. So we still reflect in higher prices that what we have seen today. That's why when we mention that the fourth quarter should start to reflect a better scenario for Termion, reflecting on the price increases that we have seen right now, but also the reduction in cost that we have also seen. It was mentioned also over here, but I don't know if it's going down; coal prices are going down.

Speaker Change #108: following this button.

Speaker Change #108: Let me add to what Maximo said, that we will also continue to see a certain level of...

Maximo Vedoya: cost that will be reflecting the purchase last and the purchased raw material we need in the past So still reflecting higher prices than what we are seeing today that's why when we mentioned

Speaker Change #112: The fourth quarter should start to reflect the scenario for Ternium, reflecting not only the price increases that we are seeing right now, but also the reduction in cost that we are also seeing. It was mentioned also over here that the dollar is going down, gold prices are going down. So prices are also reducing from what they have.

Pablo Daniel Brizzio: It was mentioned also over here that I don't know is going down, coal prices are going down. So prices are also reducing from what we will not see fully during the third quarter. This is more for the fourth quarter and year-end. That's why we always like to look at a longer period than a quarter because, usually, you could have the lag and the timing difference on the cost of prices, and this could lead to that. But in general, yeah, we are clearly seeing a bottom during the third quarter and a recovery in the fourth and entering into.

Pablo Rocca: So prices are also reducing from at this. We will not see that due to yet fully viewing the third quarter. This is more for the fourth quarter, but what we always like to look at a longer period than a quarter, because usually you could have the lag and the timing difference on the cost of the prices, and this could lead to that.

Speaker Change #114: We will not see that yet fully during the third quarter, this is more for the fourth quarter and the year-end. That's why we always like to look at a longer period than a quarter because usually you could have...

Speaker Change #105: [inaudible]

Operator: But in general, we are clearly seeing the bottom during the third quarter, recovery in the fourth, and entering into the next year. And there are no further questions at this time.

Operator: And there are no further questions at this time. I will now turn the call back over to the CEO. Thank you and thank you to all. We appreciate your participation on this call and all the questions you ask. We welcome any feedback you may have. So, thank you again, and have a nice day.

Maximo Vedoya: I will now turn the call back over to the CEO. Thank you. And thank you to all. We appreciate your participation on this call and all the questions you ask. We welcome any feedback you may have.

Speaker Change #110: And there are no further questions at this time. I will now turn the call back over to the CEO .

CEO: Thank you and thank you to all. We appreciate your participation on this call and all the questions you ask. We welcome any feedback you may have. So thank you again and have a nice day. Bye-bye.

Operator: So thank you again and have an idea. Bye-bye.

Operator: And this concludes today's conference call. You may now disconnect.

Speaker Change #111: And this concludes today's conference call. You may now disconnect.

Speaker Change #113: www.adrenalinejews.com www.adrenalinejews.com