Ternium, the vanguard of Latin America's steelmaking industry, is reaping the immediate fruits of nearshoring, particularly from its small and medium-sized clientele in Mexico, such as the thriving auto parts companies. The company's steel shipments in the second quarter of 2023 amounted to 3.0 million metric tons, registering a 3% sequential decline but a notable 1% year-on-year increase. Notably, Mexico's shipments reached 2.0 million metric tons, marking a 2% dip from the all-time-high in the first quarter, yet a remarkable 21% surge compared to the second quarter of 2022.Ternium's success is attributable to the burgeoning industrial customers in Mexico, notably those in the home appliance and automotive sectors. The strong demand in the commercial steel market has remained robust, further bolstering the company's position. Amidst these triumphs, Ternium's CEO, Mr. Maximo Vedoya, shared insights during the firm's quarterly earnings call, highlighting the influx of customers making strategic investments and migrating to Mexico. These include several small and medium-sized suppliers to the automotive industry, focusing on white goods, HVAC, and electric motors.Notably, the Mexican government estimates a nearshoring potential of a staggering $40 billion for this year, as businesses seek to relocate their supply chains closer to primary markets, with the U.S. being a key focus. Nevertheless, the full benefits of nearshoring are expected to manifest under the next administration, which commences after the end of President Mr. Andrés Manuel López Obrador's six-year term in October 2024.Mr. Vedoya predicts that it will take a couple of years before automotive giants like Tesla set up production in Mexico. However, the present surge in consumption can be attributed to the influx of steel-consuming manufacturers, particularly from Asia, who are seizing the opportunity to establish their presence in Mexico. This trend has resulted in a 15% increase in the flat steel industrial market in Mexico, with significant investments concentrated in the northern region.Furthermore, Ternium has capitalized on the complex financial situation faced by local steelmaker Ahmsa, gaining market share as a consequence. Ternium's outlook for Mexican steel consumption in 2023 is notably optimistic, projecting a 4.3% increase compared to the previous year. This forecast outpaces the World Steel Association's earlier projection of 2.5%. The company's strategic investments, particularly the construction of a new steel mill, are poised to cater to various industries, including automotive, renewable energy, and home appliances.
Ternium, the vanguard of Latin America's steelmaking industry, is reaping the immediate fruits of nearshoring, particularly from its small and medium-sized clientele in Mexico, such as the thriving auto parts companies. The company's steel shipments in the second quarter of 2023 amounted to 3.0 million metric tons, registering a 3% sequential decline but a notable 1% year-on-year increase. Notably, Mexico's shipments reached 2.0 million metric tons, marking a 2% dip from the all-time-high in the first quarter, yet a remarkable 21% surge compared to the second quarter of 2022.Ternium's success is attributable to the burgeoning industrial customers in Mexico, notably those in the home appliance and automotive sectors. The strong demand in the commercial steel market has remained robust, further bolstering the company's position. Amidst these triumphs, Ternium's CEO, Mr. Maximo Vedoya, shared insights during the firm's quarterly earnings call, highlighting the influx of customers making strategic investments and migrating to Mexico. These include several small and medium-sized suppliers to the automotive industry, focusing on white goods, HVAC, and electric motors.Notably, the Mexican government estimates a nearshoring potential of a staggering $40 billion for this year, as businesses seek to relocate their supply chains closer to primary markets, with the U.S. being a key focus. Nevertheless, the full benefits of nearshoring are expected to manifest under the next administration, which commences after the end of President Mr. Andrés Manuel López Obrador's six-year term in October 2024.Mr. Vedoya predicts that it will take a couple of years before automotive giants like Tesla set up production in Mexico. However, the present surge in consumption can be attributed to the influx of steel-consuming manufacturers, particularly from Asia, who are seizing the opportunity to establish their presence in Mexico. This trend has resulted in a 15% increase in the flat steel industrial market in Mexico, with significant investments concentrated in the northern region.Furthermore, Ternium has capitalized on the complex financial situation faced by local steelmaker Ahmsa, gaining market share as a consequence. Ternium's outlook for Mexican steel consumption in 2023 is notably optimistic, projecting a 4.3% increase compared to the previous year. This forecast outpaces the World Steel Association's earlier projection of 2.5%. The company's strategic investments, particularly the construction of a new steel mill, are poised to cater to various industries, including automotive, renewable energy, and home appliances.
