Q4 2024 Ternium SA Earnings Call
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Thank you.
Page two in today's webcast presentation.
Also find any reference to non <unk> financial measures reconciled to the most directly comparable <unk> measures.
The press release issued yesterday.
With that I.
Mr. Benoit: Go to the call over to Mr. Benoit. Thank you Sebastian good morning, and thanks, everybody for joining us today.
Speaker Change: <unk> reported shipments of 16 <unk>.
Speaker Change: Pounds for 'twenty 'twenty four with adjusted EBITDA of 2 billion on a 12% margin.
Speaker Change: In a challenging year for the steel industry, our operation generated billions in cash.
Speaker Change: The company's net cash position remains strong.
Speaker Change: One 6 billion by the end of December even though Capex was close to $2 billion in the year, and we paid dividends of more than $600 million.
Speaker Change: During the quarter, we made significant progress on our downstream expansion project in Mexico, the plating line at <unk>.
Speaker Change: Finishing center started operations and are steadily advancing in the ramp up process. We currently have two remaining lines under construction for the completion of this project a cold Rolling mill.
Speaker Change: Plant startup has been advanced to December of 2025.
Speaker Change: How deep galvanized line, which will also commence operation by the end of the year.
Speaker Change: Another positive development of the fourth quarter is that the wind farm in Argentina began generating electricity in December all of the 22 wind turbine Scott have already been installed the wind farm is expected to deliver approximately four.
Speaker Change: You got one hour.
Speaker Change: Sure.
Speaker Change: 480 gigawatt hour per year, replacing the majority of our purchase.
Speaker Change: Third party electricity in the country. These initiatives provide substantial economic benefits and assist the company in achieving its second monetization goals.
Speaker Change: Yeah.
Speaker Change: A good lineup.
Speaker Change: To address the latest developments in international trade.
Speaker Change: Search and U S reductions during the last few weeks has been creating substantial uncertainty in the global market, Mexico together with Canada are among the countries that have been singled out by the recently announced trade measures. In addition steel has been a specific.
Speaker Change: Target as the U S announced it would've revoke all country specific pick exceptions to the 25% tariff on steel imports under section 232.
Speaker Change: I'm a strong believer in the advantage of the U S MCA.
Speaker Change: There is a deeply complementary relationship among U S. MCA members, which has led to increased trade investments.
Speaker Change: Job creation, we think the North American region. The U S. MCA has played a critical role in enhancing the competitiveness of the whole area. Therefore, we believe.
Speaker Change: That's right.
Speaker Change: The value chains. Among these nations will continue to drive further deepening commercial integration among the three countries is a way to go.
Speaker Change: It could be beneficial for all of them.
Speaker Change: Revenue is will it keep two megabit equipped to navigate any potential trade scenarios due.
Speaker Change: Its ability to adapt the structure in response to changes in the landscape.
Speaker Change: Always we will continue our effort to enhance the efficiency of our brewery operations to reduce costs, we are ready to compete effectively in today's uncertain environment.
Speaker Change: Now, let's review our main steel markets.
Speaker Change: In Mexico shipments in the fourth quarter decreased due to a weaker than expected commercial market. The industrial market in Mexico is showing steady activity levels. Following an increase of 6% in auto industry production in 2024.
Speaker Change: On the other.
Speaker Change: Weak government infrastructure investment and uncertainties surrounding trade actions are affecting volumes in the commercial market. This will probably continue to happen until a definitive understanding of the final test measures is achieved.
Speaker Change: Moving now to Brazil, 2024 was a positive year with flat steel apparent consumption, increasing a healthy 10%.
Speaker Change: Co productions grew strongly as well, we've got 10% increase compare to 2023.
Speaker Change: Yeah.
Speaker Change: 22, Q4 saw significant operational improvements and Youll see me nuts, resulting from investments made in recent years, particularly the realigning of blast furnace number three.
Speaker Change: As a result, well see minutes produce $3 2 million tonnes of crude steel among the highest.
Speaker Change: Volume levels of the last 10, yes.
Speaker Change: On the other inputs.
Speaker Change: Imports are flat still exceeded $3 million.
Speaker Change: In 2024, setting a new record.
Speaker Change: China remains at this stabilizing factor in the international steel market.
Speaker Change: The construction of steel consumption in its domestic market in recent years.
Speaker Change: To a disproportionate increase in exports and the unfair trade conditions.
Speaker Change: Imports from China have significantly disrupted the Brazilian market.
Speaker Change: Hoping for approximately 80% of flat steel imports.
Speaker Change: The import or the system implemented last year did not achieve its goals.
Speaker Change: We look forward to more effective trade measures from the Brazilian government.
Speaker Change: Actually I saw the country's strengthen their defense against unfair trade.
Speaker Change: Essentially causing a diversion of China's exports to other markets.
Speaker Change: On a different subject, we are very proud to share that last week.
Speaker Change: Work to look at technical school in Santa Cruz, Okay. The near term in Brazil facility began its first classes. This is the second technical school that term you build and operate.
Speaker Change: The first one active since 2000.
Speaker Change: Our Korea facility in Monterrey, Mexico.
Speaker Change: The school, we provide high quality technical education to immediate initial cohort of 192 students in the community and will accommodate close to 600 student over the next three years.
Speaker Change: All students and Roberto Rocha Technical School network received scholarships based on their family financial needs and ensuring equal access to education. This initiative reflects <unk> dedication to supporting the development of the communities near its production site and creating transfer.
Speaker Change: Multiple opportunities for their use.
Speaker Change: Okay.
Speaker Change: Turning now to Argentina.
Speaker Change: In 2024 shipments experienced a year over year decline of approximately 20%.
Speaker Change: This reduction was primarily due to the implementation of macroeconomic measures by the Argentine government, which aimed to address substantial economic imbalance.
Speaker Change: Although Argentina steel demand has been recovery throughout 2024, it's starting from a low base.
Speaker Change: Has yet to return to historic sales volumes.
Speaker Change: The authorities in Argentina are advancing.
Speaker Change: Transformation of the local economy through a process of the regulation radios in public spending and taxes and opening up.
Speaker Change: Although we welcome this transformation.
Speaker Change: Uneven progress in this area could increase the risk of higher imports of unfair trade products in the steel value change.
Yeah.
Speaker Change: I would like to close my prepared comments with a few thoughts.
Speaker Change: U S trade measure against imports are currently fluid during the first half of 2025.
Speaker Change: It is likely that we will continue to navigate these uncertain scenario in the North American region, We trust that at the conclusion of the negotiations rationale decision, making will prevail.
Salting in our region experienced a significant growth and improve defense against unfair trade practice.
Speaker Change: In the same line the planned Mexico recently announced by the Mexican government aims to address issues related to regional integration with a focus on interest realizing for import substitution. The plan the plan outlined strategy to attract investment and increase.
Speaker Change: The local and regional content of manufactured goods through.
Speaker Change: Both near shoring.
Speaker Change: Such a development and support for <unk>.
Speaker Change: Yes.
Speaker Change: In this context, our expansion projects in Mexico are crucial for strengthening paramount's integration into the North American market as rule of origin regarding melted and poured steel.
Speaker Change: <unk> are expected to become stricter.
Speaker Change: Brazil was EMEA was manufacturing facility achieved significant efficiency improvements in 2020 for a trend. We expect will continue in 2025 as operations are further streamline.
Speaker Change: Finally.
Speaker Change: Given the improvement in macroeconomic condition, the Argentina I expect our shipment will continue recovering throughout this year. This.
Speaker Change: This concludes my remarks Pablo. Please proceed with a review of <unk> performance in the fourth quarter.
Speaker Change: Thanks, much more willing to any volumes from some of the year.
Speaker Change: What do we need has today.
Speaker Change: Let's turn to the webcast presentation will be to look at our liquidations now financially.
Speaker Change: If we begin in phase three we see that adjusted EBITDA.
Speaker Change: Cool.
Speaker Change: The key factors behind these results include lower realized prices in our main market and the reduction in shipments.
Speaker Change: These were partially offset by a decrease in steel costs.
Speaker Change: When you look ahead to the first quarter of D. C. I think you can see five we anticipate a sequential increase in adjusted EBITDA.
Speaker Change: But the margin improvement and a small increase in volumes.
Speaker Change: Moving to the next slide net income for the fourth quarter was $333 million. The company recognized 404 million provision reversal for ongoing litigation related to the 2012 acquisition of stake.
Speaker Change: The main difference between net income in the fourth quarter in the third quarter what are the decline in operating income.
Speaker Change: Although we have a negative effect of changes in foreign exchange results.
Speaker Change: Lower income tax charges and the provision mentioned provision.
Speaker Change: Regardless of changes in foreign exchange results, it's important to point out the impact will be with us.
Speaker Change: 12% depreciation against the U S dollar during the fourth quarter U S dollar denominated so I mentioned it.
Speaker Change: Is it cost you need to use it.
Speaker Change: Actually our currency currency not the U S.
Speaker Change: Now, let's review the performance of our two segments on page five.
Speaker Change: This quarter steel shipments across all of <unk> key markets declined primarily due to the typical seasonal reduction in demand.
Speaker Change: The year on a recently the commercial market in Mexico experienced a downturn of Maximo already explained.
Speaker Change: Looking ahead, we expect some increase in shipments in Brazil in the fourth quarter.
Speaker Change: With me here in the next quarter of the year fourth quarter with digital divide one shipment in Mexico, and Argentina are expected to remain stable.
Speaker Change: In the following page segment net sales declined sequentially by 14% in the fourth quarter.
Even with lower Shippable. This decrease was driven by a reduction in realized prices across all markets.
Speaker Change: The decline in prices was partially offset by a reduction in cost per ton, which however was not enough to avoid a decrease in margins.
Speaker Change: Worth, noting that the pace of course interaction in our books is slower than the decline in raw material prices in the market as a company is consuming high priced inventory.
Speaker Change: Quarry in earlier periods.
Speaker Change: Next let's turn to slide seven for the overview of our mining segment performance mining shipments remained stable during the quarter.
Speaker Change: But year over year, there were about 9% in the fourth quarter, mainly due to lower production levels both in Mexico.
Speaker Change: On the op margins in Peru, mainly driven by lower costs.
Speaker Change: Let's move on to the next slide to review our cash flow performance.
Speaker Change: Starting with reported.
Speaker Change: Cash flow from operations in the fourth quarter supported by a decrease in working capital mainly driven by lower receivables.
Speaker Change: Capex you can see as robust, especially appropriate index year on finish their wind farm in Argentina, and regionally, we paid interim dividend.
Speaker Change: Even though we saw the significant.
Speaker Change: In the fourth quarter, our financial position remained strong with $1 6 million net cash.
Speaker Change: Of December by a $2 million increase in the fair value of financial lease.
Speaker Change: Let's shift our focus to take one to hit our full year performance.
Speaker Change: EBITDA declined in the last two years, primarily due to deconsolidation of UC, Minas and the downward pressure of license deal prices.
Speaker Change: These factors affected our results are reflected in net income.
Speaker Change: The decline also incorporates the net provision I mentioned earlier together with negative before tax itself and the impact of a significant depreciation.
Yes.
Speaker Change: During the year.
Speaker Change: Usually mean foreign exchanges.
Speaker Change: Savings cash from operations was solid in 2024, allowing us to finance the increased level of capex in the year.
Speaker Change: Looking ahead, we expect Capex to Pik interest you can decide which is around two 5 billion.
Speaker Change: Important to mention the board of directors put forward a proposal for an ordinary dividend of two.
Speaker Change: 70, <unk> previous business.
Speaker Change: Percent of dividend yield of approximately 9%.
We have already commuted an interim dividend of 90% in November.
Speaker Change: Subject to shareholders' approval that remaining $1 80 will.
Speaker Change: It will be paid out in may.
Speaker Change: Alright. This concludes our prepared remarks.
Speaker Change: I'm now ready to take your questions. Operator, please begin the Q&A session.
Speaker Change: Thank you the floor is now open for questions. If you have dialed in and I'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.
Speaker Change: If you would like to withdraw your question simply press Star one again.
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Speaker Change: And our first question comes from Carlos de Alba with Morgan Stanley. Please go ahead.
Speaker Change: Yes, good morning, everyone. Thank you very much.
Speaker Change: First question is I'm going to try to press a little bit.
Speaker Change: On the outlook for the first quarter.
Speaker Change: A lot of uncertainty out there, but how did you find in slide <unk>.
Speaker Change: <unk> right now.
Speaker Change: There is a wide range of consensus forecast.
Speaker Change: And so I know you will.
Speaker Change: Really hoping you can provide a little bit more detail as to how do you see the quarter the quarter evolving.
Speaker Change: And then I wanted to also I wanted to also ask an update on.
Speaker Change: On the different ramp ups.
Speaker Change: And.
Speaker Change: It looks like <unk> is a project in the basket.
Speaker Change: You can maybe be a little bit when do you expect the ramp up of the finishing lines to be completed.
Speaker Change: <unk>.
Speaker Change: When do you expect the cold rolled coil and the hot dip galvanizing new lines to be running at close to full capacity full capacity. If that you start in December of this year. Thank you very much.
Speaker Change: Thank you Carlos I will start with the second which is much more.
Speaker Change: Direct and then try to answer the first one.
Speaker Change: Ramp up of <unk> so.
Speaker Change: In the <unk>.
Speaker Change: Yeah.
Speaker Change: Finishing lines or in the <unk>.
Speaker Change: Sounds good.
Speaker Change:
Speaker Change: We have four projects, let's put it that way they peak in line and the finishing lines are already producing a little bit ahead of what was the plant.
Speaker Change: And I guess for the next two or three three months it will be at full capacity.
Speaker Change: I will put it then.
Speaker Change: Then we have the court the galvanized line, which was supposed to re supposed to start in December we are not seeing any delay in the ramp up curve that starts in December of this year I mean, all the equipment out there. It does Korea and we have all the people working in the cost structure.
Speaker Change: And putting those equipment in the cold rolled facility in the PL TCM too.
Speaker Change: We were expected to start in March February March of 2026.
We are seeing some improvements.
Speaker Change: Better advancing.
Speaker Change: In in in the construction of the equipment and the facility.
Speaker Change: So we are expected to start in December of this year. So we are.
Speaker Change: Advance the ramp at a couple of months.
Speaker Change: So on those project, we don't see any problem.
Speaker Change: And we're going forward at full speed and the other one is.
Speaker Change: The steel shop, and the reduction unit.
Speaker Change: That is supposed to start up in mid 2026, we are still having that date, but as you know in that facility. We don't have yet all the contract finalized I mean, we are finally finalizing in this quarter some of our contracts for equipment.
Speaker Change: More important.
Speaker Change: Most of the contract for the construction, although the contractionary going through so by the end of <unk>.
Speaker Change: Next quarter, we will probably have an.
Speaker Change: And the idea exactly of when we will start but we're still holding to the time for 2020 mid 2026.
Speaker Change: Yes, hi, good morning.
Speaker Change: Just maybe to clarify what when do you when would you expect the cologuard on the holiday galvanize to be.
Speaker Change: We didn't get full capacity.
Speaker Change: Well the ramp up curve in these projects are usually between nine nine months in one year.
Speaker Change: But they have steadied, producing starting producing from day one.
Speaker Change: And for example in the case of the cold rolled through to get the hundred and 20 130000 tonnes a month.
Speaker Change: Get between nine and one year, that's what we have in our plans.
Speaker Change: We will try harder to tell.
Speaker Change: Get that closer to December of 2025, but for now it between nine and 12 months.
Speaker Change: Okay I hope that answers. The question are these the second question.
Speaker Change: So our outlook.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: As we said we are expecting to see an increase.
Speaker Change: Increasingly the utilization for the first quarter of a year at least.
Speaker Change: The startup of our freedom.
Speaker Change: But I think that will happen during the quarter first volumes.
Speaker Change: Amongst most of his career in the opening remarks, we are expecting to see them steady level of shipments in the different markets, where we are.
Speaker Change: This coupled with the issues of multiple Mexican mentioned also something.
Speaker Change: So we are expected to sustain a level of shipments during the first quarter.
Speaker Change: First point the second point is that though.
Speaker Change: This is a moving we.
Speaker Change: When you see some decline in the average price of the company view.
Speaker Change: The issue that you would know very well, which is that prices are reset every quarter. So all changes in prices have not reflected immediately.
Speaker Change: And the most important part is that during the first quarter, we will see a decline in cost.
Speaker Change: Different differently from what we saw during the fourth quarter. This decline in cost will be higher than what we were expecting to see although declining prices. So we are expecting to see better margin during the first quarter.
Speaker Change: We continue we'll continue to see the substitution that we saw during the first during the fourth quarter of a year, which is that there is a delay in reflecting the pricing throughout our cost structure due to associates with long issue that will utilize so we're expecting to continue see.
Speaker Change: One of the cost reduction throughout the semester.
Speaker Change: Having had where it peaked during the second quarter.
Douglas: And Douglas.
Speaker Change: [laughter].
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Tayo Ribeiro of Bank of America. Please go ahead.
Tayo Ribeiro: Yes. Good morning, Thank you for the opportunity. So my first question on your stake in <unk>. Later this year you have the option to purchase Nippon stake within the control block.
Tayo Ribeiro: Upon has the option to sell that state's attorney and so my question is.
Tayo Ribeiro: Adding to your stake in the company is something that you're contemplating right now.
Tayo Ribeiro: And is there any color that you can share on how both sides see this particular transaction.
Tayo Ribeiro: And then secondly, still on what do you mean US you know with the blast furnace revamp completed.
Tayo Ribeiro: Or the next priorities that you see for the company I do see a potential to green light the capex in the mining division this year or next.
Tayo Ribeiro: If so how would the company fund that Capex. Thank you.
Speaker Change: Thank you Kyle.
Speaker Change: For the for the two questions regarding the first one I mean, the only thing that happened as you said in July.
Speaker Change: Is that.
Speaker Change: Both Nippon steel.
Speaker Change: We have the option the options.
Speaker Change: To sell or buy.
Speaker Change: And they become exercise excess sebo.
Speaker Change: We can exercise those.
Speaker Change: From July.
Speaker Change: The only thing that changed in Mena.
Speaker Change: I clearly cannot speak of what need Polish thinking of these but from our side I can say that.
Speaker Change: As you saw in the results I am very pleased with how well <unk> and our partnership with Nippon Steel are performing today. So we will for now we will keep working with the gold.
Speaker Change: Bringing <unk> to the highest potential.
Speaker Change: Regarding the priorities <unk> clearly the Capex in mining is one of the things that we're working as I said in some.
Speaker Change: Other calls we have to take the decision by the end of this year or the beginning of next year, but in the meantime, we are working very hard to get to the point of having to make the decision with most of the things done.
Speaker Change: So that we don't have any delays if we go through that project.
Speaker Change: The other priorities of if you mean us are clearly improving the performance of of putting his meal, that's clearly up.
Speaker Change: The priority of the management there are some investments that we have to do and that we are doing in order to decrease cost and increase productivity and the second is a commercial site, where we have all the challenges with them.
Speaker Change: The input for China, and how we approach customers and give more value to customers. So those are the priorities that we are working in the <unk> right now.
Speaker Change: I hope it answer the question.
Speaker Change: Yes, absolutely that's very clear thank you maximo.
Maximo: Youre welcome.
Maximo: Your next question comes from the line of Alejandro Demichelis with Jefferies. Please go ahead.
Alejandro DeMichelis: Yes. Good morning, gentlemen, thank you for taking my questions couple of questions. Please the first one.
Speaker Change: You talk about timing and being prepared to.
Speaker Change: Navigate displacing for example.
Speaker Change: Would that also include say putting on hold some of your new investments while D. C U.
Speaker Change: In Mexico or any of the rest of the regions for the first question and then the second question is in the case of Argentina.
Speaker Change: Can you talk about the situation about volumes recovering also could you talk also about the equation of this crop exports I'll call that could impact your cost base over there.
Speaker Change: Yes.
Speaker Change: One the scrap export is not very significant for us as you remember.
Speaker Change: In Argentina.
Speaker Change: We don't use much scrap.
Speaker Change: It's different than in Mexico, and so.
Speaker Change: The amount of crop we bought from the market every month is at around 8000 tons. It's clearly not an issue described probably 10 issue for other steel companies in Argentina.
Speaker Change: That has a much more scrap basis in their inputs, but remember us in Argentina.
Speaker Change: Regarding the cause of new investment.
Speaker Change: We are not thinking of topping of postponing any investment.
Speaker Change: As I said, the PL TCM, the cold Rolling mill and the galvanize are almost completed by the end of the year they are going to to be completed.
Speaker Change: And if you see what is happening Mexican market the Mexican market has a huge.
Speaker Change: Amount of imports from third countries, which.
Speaker Change: We are not able to really.
Speaker Change: A fact that fully.
Speaker Change: Substitute that's better substitute.
Speaker Change: Because we don't have enough capacity probably to do so in the technical issue. So we are going to forward and it's very rational to continue the other one is the steel shop.
Speaker Change: The steel shop again.
Speaker Change: Yeah.
Speaker Change: Probably know all these that is happening as you mentioned in the in this uncertainty in the North American market.
Speaker Change: One thing that.
Speaker Change: Sure it's going to happen is that the rule of origin are going to be strengthened.
Speaker Change: Even more so melted and poured requirements are going to we are going to need the melted and poured.
Speaker Change: And so for that I think that from the Korea project from the position of that any of them.
Alejandro DeMichelis: I hope Alejandro it's clear.
Speaker Change: Yes.
Speaker Change: It is very clear.
Speaker Change: If I can follow up a little bit on that so on the discussions that we're having with our main customers, particularly D. D E and do automotive industry for the rest of it yes.
Speaker Change: Are they indicating volumes sorry between now and you end up there yet.
Speaker Change: They don't have any changes in the volumes remember the still the auto industry in Mexico ended up on a year with growth.
Speaker Change: And they are not indicating any changes what they are doing is clearly working on changing some of the imports they have from third countries.
Speaker Change: So we are working with them to.
Speaker Change: To start changing or making running changes.
Speaker Change: Imports they have from Asia, mainly.
Speaker Change: Okay.
Speaker Change: Thank you Angela.
Speaker Change: Thank you Alejandro.
Speaker Change: Your next question comes from the line of Timna Tanners with Wolfe Research. Please go ahead.
Speaker Change: Yeah, Hey, good morning wanted to ask my wife, you can pick your brain really on that theme I feel like the introductory remarks was really that China continues to be a big problem for the three main regions, where you operate so do you have any level of optimism that those countries.
Speaker Change: Argentina, Brazil, Mexico can implement barriers or will be.
Speaker Change: And in doing so to help prevent some of those problems have been parts that you've been talking to anytime soon.
Speaker Change: Yes, I am optimistic in different levels, depending on the country I mean, let me put the perspective of China, a little bit.
Speaker Change: And then I took the specific of what the three countries are doing.
China or the steel industry in China, but it is not only apply to the steel industry is applied to a lot of industry.
Speaker Change: So China has been decreasing consumption for the next for the last three years apparent consumption in the country. So it reduced I think in average 4% each year.
Speaker Change: The last three years.
Speaker Change: But on the contrary production has been the same.
So this is a huge deal.
Speaker Change: The balance.
Speaker Change: The Chinese steel industry exports from China and still increase in.
Speaker Change: In 2024 by 25% that's.
Speaker Change: An enormous amount of steel.
Speaker Change: And then do you see the balance of what is happening in the steel industry in China most of the companies have already money.
Speaker Change: So it's not a sustainable situation.
Speaker Change: Having said that they are still exporting.
Speaker Change: All these things that have no sense.
Speaker Change: In our countries I think Mexico is.
Speaker Change: Is the one that's ahead of us.
Speaker Change: Clearly they understand very well what is going on in China.
Speaker Change: The importance of defending the industry again in fair trade and they are working in defence. So they are putting the dumping cases theyre, putting some tariffs and I think that they are starting to work in.
Speaker Change: Other issues.
Speaker Change: That's a.
Speaker Change: Our fighting plus shipments that is happening in Mexico in the U S and Canada. So so China is looking for ways to evade the stories and I think Mexico has very clear path.
Speaker Change: Work.
Speaker Change: In the Middle East, Brazil, we'd say made measures at this quarter, but clearly this quarter as I said is known is not working so the dumping cases have been presented.
Speaker Change: And I think the government.
Speaker Change: Quite positive that the government is going to go through the dumping cases, which will be a much affected barrier to unfair trade Argentina.
Speaker Change: I think is the one that is a little bit behind.
Speaker Change: These.
[laughter], sorry, because Argentina is still.
Speaker Change: Trying to stabilize they make our economy.
Speaker Change: But again I think that.
Speaker Change: A certain part of this year they are going to start realizing.
Speaker Change: That if we want to sustain an industry we have to.
Speaker Change: Fight against unfair trade, that's simply the reason so I'm optimistic.
Speaker Change: That in some part of this year, they're going to realize these and we have one.
Speaker Change: We will work together.
Speaker Change: Doing during this.
Speaker Change: So I hope I understand.
Speaker Change: I answer part of your question yes.
Speaker Change: Yes that was helpful. Thanks, Matt I'm, sorry, I wanted to also put you on the spot regarding U S. Mexico trade policy on steel so with.
Speaker Change: In the past you've also talked about how any tariffs on Mexico.
Speaker Change: Could be positive for turn Andy has any retaliatory Catholic keep.
Because the U S is a net importer.
Speaker Change: So if they're if they were a retaliatory cast in that steel would stay in.
Speaker Change: Mexico and you could be you could.
Speaker Change: Fill the gaps.
Speaker Change: It takes share from imports, but on the other hand.
Speaker Change: Now that those cash looks to be applied to the downstream side. Some downstream customers can be affected and of course, you already addressed auto. So I mean any updated thoughts on retaliation or if the tariffs are in place as it is is it is it down is it more negative just because of your customer impact than the positive.
Speaker Change: No longer receiving U S imports. Thanks again.
Speaker Change: Thank you Tim that's a very.
Speaker Change: Uncertain question to answer because clearly I don't know where this is going to end.
Speaker Change: What I can tell you is first of all.
Speaker Change: <unk>.
Speaker Change: As of today we.
Speaker Change: We don't.
Speaker Change: Export significant volumes to the U S.
Speaker Change: So 4% of our role at flat rolled products goes to the U S is that a very significant amount.
Speaker Change:
Speaker Change: And as you said in the relationship still relationship between Mexico, and the U S.
Speaker Change: Mexico, that's a huge.
Speaker Change: Steel trade deficit I mean, I think that this is the only country Mexico is the only country, where the U S steel industry.
Speaker Change: That's a surplus and a surplus that is.
Speaker Change: Very big compare to.
Speaker Change: Between exports and imports.
Speaker Change: Yeah.
Speaker Change: So I mean.
Speaker Change: As I said.
Speaker Change: The challenge that both the U S and Mexico or are working on.
Speaker Change: Facing today is not the trade between these two countries, but it's a trade we have in Mexico that they have in the U S. With all these other countries.
Speaker Change: So at the end I think that the U S and Mexico are going to reach a reasonably a reasonable agreement in this situation.
Speaker Change: Am I not seeing.
Speaker Change: Uh huh.
Speaker Change: In a scenario where.
Speaker Change: It goes further.
Speaker Change: You were tailing off tariff in both sides.
Speaker Change: Again, it should be.
Speaker Change: Reasonable agreement given the situation.
But again, it's a.
Speaker Change: It's difficult to.
Speaker Change: To speculate on all these negotiations that are going through between the U S and Mexico today.
Speaker Change: No. We appreciate that thank you Massimo sorry to put you on the spot.
Speaker Change: Oh, no it's not on the spot, but I mean, it's negotiations that are happening right now.
Speaker Change: And again when you see the numbers when do you see the.
Speaker Change: Especially in steel.
Speaker Change: It's very easy to reach an agreement they shouldn't go further than reaching an agreement in that.
Speaker Change: And I think Thats the best for all outcomes from the U S from Mexico from the government.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Alfonso Salazar with Scotiabank. Please go ahead.
Alfonso Salazar: Yes. Thank you.
Speaker Change: Massimo.
You mentioned in your presentation, we hope that rational decision, making will prevail.
Speaker Change: I think we all agree with you on that now the question that I have Easter that.
Speaker Change: How is the U S planning too to balance the supply and demand without the imports in the U S. I mean.
Speaker Change: It doesn't look to me that something that would be easy to do is their appetite to invest in more capacity given that you know there is a global over capacity you know what would be the implications for end users so steel.
Also for the global scrap markets in North America and globally, there is more of.
Speaker Change: The scrap in the U S.
Speaker Change: I mean, it seems like it's going to have lots of red medications that eventually would be CBS.
Speaker Change: We can and in a world in which and.
Speaker Change: In which basically we have.
Speaker Change: This bifurcation of trade.
Speaker Change: I'm with China, you know.
Speaker Change: Selling more to other countries.
Countries and other countries and certainly most deal you know.
Speaker Change: And then how about like a century in not in North America and multiples in the U S.
Speaker Change: But that doesn't seem to be a situation that could stay for long. So any color that you can provide especially in how how do you envision do you know.
Speaker Change: Market that is.
Speaker Change: Hopefully supplied without imports in the U S.
Speaker Change: Thank you.
Speaker Change: The impact implications of illness scrap markets as well.
Speaker Change: Yeah first of all thank you very much is a very good question I don't know if I have the answer to that I think it's.
Speaker Change: It's a question for.
Speaker Change: Or for other companies.
Speaker Change: I mean, but you are right about I mean, I don't think that the outcome of all these negotiation.
Speaker Change:
Speaker Change: Could be that what you are saying, but.
Speaker Change: But I I think sitting there in the initial remarks I dunno against the rest of the world and are not capable of saying what would be the relationship between the U S and China or Asia, or Europe, but I am a strong believer.
Speaker Change: And the advantage of the U S MCA.
Speaker Change: If you see the story of the U S MCA, which is not a very long story.
Speaker Change: The trade among the members of the three countries.
Speaker Change: Grew significantly over the last year in every way I mean from Mexico to the U S. But the U S to Mexico also almost in the same amount.
Speaker Change: And the U S MCA play a role.
Speaker Change: And enhancing the competitive of the area I mean, it's very.
Speaker Change: Reasonable it's.
Speaker Change: To think.
Speaker Change: The U S MCA as a way.
Speaker Change: Strengthening the supply chain there to get competitiveness.
Speaker Change: We're fighting for.
Speaker Change: Not fighting back the defending a competing with other regions like China. So.
Speaker Change: For me.
Speaker Change: Again I think.
Speaker Change: That.
Speaker Change: At the anti will prevail, because I think the U S. MCA is beneficial for the three countries.
Speaker Change: The other side I see how Mexico is reacting before all these trade even before this trend if you see that.
Speaker Change: Mexico plant the plant, Mexico that breadth of shame, but announced I think at the beginning of the year.
Speaker Change: He's very focused on what we have been saying.
Speaker Change: For a long time, and how we must focus on industrializing impulse restitution for Asia, strengthening North America supply chain I mean, if you here. So what Mexico is doing the plant in Mexico has its also go in the same way so.
Speaker Change: Again.
Speaker Change: It's.
Speaker Change: I am optimistic that reason will prevail I can tell you that for sure.
Yeah. Thank you.
Speaker Change: Any comment on the global scrap trade you know.
Speaker Change: And how you see that changing are unfolding right now.
Speaker Change: You know, what we know about the Italian.
Speaker Change: This idea to produce moly in the in the U S in particular.
Speaker Change: Well I think to produce more in the U S. It's a long time, so at least any new capacity will be 345 years to coming except of what we're already seeing in the U S. So I don't think that there's going to be a lot of change of course crop.
Speaker Change: It's going to be.
Speaker Change: But we know these I mean, it's going to be a market where more people are going to use scrap because we are changing the route from blast furnace to electrical out but this is taking a long way. So I don't foresee any major changes in the next two years.
Excellent. Thank you so much.
Speaker Change: There are no further questions at this time I will now turn the call back over to Tony <unk> CEO for closing remarks.
Speaker Change: Okay. Thank you very much all for participating very good questions.
Speaker Change: Always your feedback is much appreciated if you have any have a good day and we see I will talk in the next three months. Thank you.
Speaker Change: This concludes today's conference call. Thank you for joining you may now disconnect.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
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