Mexico is key growth opportunity for Ternium, J.P. Morgan says
TX•J.P. Morgan called Mexico Ternium’s key growth opportunity and Argentina its weak spot. The firm expects the first slab from Ternium’s Pesquería complex in February and forecasts annual production of 2.6 million to 2.7 million metric tons at full capacity.
1. Mexico plant ramp-up
J.P. Morgan said Mexico remains Ternium’s key growth opportunity after meeting with the steelmaker’s senior management. The firm expects the first slab from the Pesquería steelmaking complex in northern Mexico in February and forecasts annual slab production of 2.6 million to 2.7 million metric tons once it reaches full capacity.
2. Regional priorities
Ternium characterized the next two years at the plant as a capital-light phase to ramp up facilities and develop new grades. Mexico would remain its top capital allocation priority, supported by trade protections, government infrastructure spending and the USMCA’s role in regional manufacturing integration. J.P. Morgan expects the trade pact to be renewed with adjustments and sees a bilateral Section 232 agreement as a potential intermediate step.
3. Argentina and dividends
Argentina was described as Ternium’s weak spot, with construction and overall consumption very low and traditional manufacturers under pressure from Chinese imports. Management pointed to the $0.90 dividend declared last November and said an increase was possible.
