Luxembourg-based Ternium S.A., which has steelmaking operations throughout Latin America, has reported operating income in the third quarter of 2017 that was down by $43 million compared with its income the previous quarter. The company attributed the drop in income “mainly to lower operating margins, partially offset by higher shipments.”
Ternium’s shipments were 429,000 tons higher in the third quarter compared with the second quarter, which the company says via a news release was “mainly due to the consolidation of Ternium Brasil’s shipments [and] a recovering demand for steel products in the Argentine market.”
On the downside, Ternium says 95,000 tons fewer were shipped in Mexico compared with the prior quarter, which the company blamed on “a seasonal slowdown of steel demand in the automotive and HVAC industries.”
Ternium’s third-quarter operating cost per ton was relatively stable, though it did face higher raw material and purchased slab costs.
Ternium’s management predicts the full-quarter consolidation of Ternium Brasil in the fourth quarter of 2017 “will have a sequentially increasing effect on Ternium’s shipments and a sequentially decreasing effect on the company’s average price and cost per ton due to the incorporation of Ternium Brasil’s slab sales into Ternium’s higher value-added sales mix.”
The company’s quarterly summary also states that its expectations of a strong second half of the year in the Argentine market materialized in the third quarter, “with a significant sequential increase in shipments. A markedly better business environment is fostering a gradual recovery in most sectors of the Argentine domestic economy, with the household appliance and automotive industries joining the previously ascendant agribusiness industry, public infrastructure investment, and shale oil and gas fields development sectors.”
However, Ternium says it anticipates lower operating income in the fourth quarter of 2017 compared with the third quarter, with higher steel shipments again partially offset by lower operating margins. The company indicates it foresees “decreasing steel prices in the Mexican market as a result of a destocking process in the United States.”