How Does Ternium Company Work?

Ternium's business model relies on a comprehensive, integrated production system. This system spans from raw material extraction, such as iron ore mining, through to the final manufacturing and distribution of diverse steel products.

The company offers a wide array of high-value-added steel products. These include slabs, billets, hot and cold-rolled coils and sheets, tinplate, galvanized and pre-painted sheets, steel pipes, beams, and wire rods.

Ternium's products serve critical customer segments across various industries. These include construction, automotive, home appliances, capital goods, energy, and food packaging sectors.

Operational processes involve advanced manufacturing techniques, strategic sourcing, and a robust logistics network. The company prioritizes continuous improvement in its plants and processes, alongside developing advanced technologies and products.

A major initiative involves a $4 billion to $4.1 billion capital expenditure for 2024 and 2025 at its Pesquería, Mexico industrial center. This expansion, slated for completion in 2026, includes a new steel slab mill and an electric arc furnace steel shop, alongside a direct reduced iron plant with a 2.1 million metric ton annual capacity.

The new Pesquería facility is designed to be a leader in sustainability, targeting the lowest CO2 emissions per ton for its products and preparing for a transition to green hydrogen post-2030. In 2024, Ternium also commissioned a wind farm in Argentina, representing a $225 million investment that will cover 90% of its electricity needs in the country.

The acquisition of a controlling interest in Usiminas in Brazil, fully consolidated from July 2023, has notably increased Ternium's reported steel shipments for 2024. This move enhances its market presence and production capacity in Latin America.

Ternium's competitive edge is built on its vertical integration, from raw material sourcing to finished product distribution, ensuring cost control and production efficiency. The company's strategy of locating plants near customers and offering specialized, high-quality steel products, combined with its dominant market share in Latin America, solidifies its position.

Ternium is a leading steel producer in the Americas, with Mexico representing 55% of its sales in 2023. Its integrated business model, covering mining to finished products, enhances cost control and efficiency across its Ternium operations.

The company faces risks from evolving trade policies, potential new competitors, and technological shifts in the cyclical steel sector. Recent revenue declines and industry growth forecasts highlight the need for strategic adaptation.

Significant investments are planned, including a $4 billion expansion in Pesquería, Mexico, to boost capacity and develop lower-carbon steelmaking. Capital expenditures are projected at $2.5 billion for 2025, primarily for this project.

Ternium aims to reduce emissions intensity by 15% by 2030, including Scope 3 emissions, with $120 million allocated to environmental projects in 2024. A strong USMCA trade pact is seen as crucial for fair competition.