Latin America-focused steelmaker Ternium said this week it expects a slow recovery for its businesses in Brazil, Mexico and Argentina. Ternium, which released weaker Q1 results this week, said it expects EBITDA in Q2 to decline, with a significant decrease in steel sales volumes at its main markets.
The company also said it expects “moderately lower EBITDA margins compared to the first quarter of the year.”
“In Mexico, with steel prices declining since March 2020 and increasing mobility restrictions, steel shipments have been weakening. Currently, the automotive industry is mostly closed and it is expected to re-open during May,” Ternium forecasted.
Other industrial customers in Mexico, including white goods and electric motors, are also expected to operate “below normal rates” in Q2. Ternium said steel sales volumes for the Mexican civil construction segment in Q2 should also decline, due to Covid-19 restrictions.
In Brazil, where the company owns slab producer Ternium Brazil, it plans to partially compensate a weaker domestic demand for slab by increased sales of the product to third parties in other markets.
However, slab sales to Ternium’s other facilities in Mexico should “to sequentially decrease due to lower rates of production.”
“In Argentina, after a minimum level of shipments month to date in April 2020, Ternium expects a gradual volume increase over the rest of Q2, as the lockdown of operations in the country is very slowly subsiding,” the company noted.