Rafael Barcellos

Rafael Barcellos asked about Ternium's outlook for the Mexican market, including demand recovery, the impact of recently announced TRQ, and the likelihood and timing of a USMCA deal. He also inquired about the expected impact of Brazil's anti-dumping measures on pricing dynamics, including pass-through speed and potential magnitude of price hikes.

Answer

Máximo Vedoya (CEO, Ternium) explained that Mexican apparent steel consumption decreased 10% in 2025 (flat products down 14%), with CANACERO estimating 4% growth in 2026. Ternium aims to gain market share. He noted USMCA timing is difficult to predict, likely impacting 2027 and beyond. Regarding Brazil, Mr. Vedoya described the anti-dumping measures as a very important first step, expecting a gradual impact on prices rather than a huge immediate increase.

Rafael Barcellos asked about Ternium's outlook for the Mexican market, including the recovery path, the potential impact of recently announced TRQ on 2026 demand growth, and the likelihood and timing of a USMCA deal. He also inquired about the expected impact of new anti-dumping measures in Brazil on pricing dynamics, whether it would be a quick or gradual pass-through, and the potential magnitude of price hikes.

Answer

Máximo Vedoya (CEO, Ternium) explained that Mexican steel demand was very low in 2025, with flat products decreasing 14%. He anticipates a 4% market growth in 2026, with local steel mills gaining market share. Vedoya projected the USMCA deal's impact more in 2027, noting the difficulty in timing. For Brazil, he highlighted the anti-dumping measures as a crucial first step against unfair trade, expecting a gradual rather than immediate significant impact on prices.

Rafael Barcellos asked about Ternium's comfort level with its current shareholder structure across regions and ongoing efforts to simplify it. He also requested an update on the Pesquería project, including expected startup, CapEx comfort after recent revisions, and any changes to its commercial strategy given market conditions.

Answer

Máximo Vedoya, Ternium's CEO, provided an update on the Pesquería project, stating that the new galvanized line will start its running curve in December, and the PLTCM cold rolling mill in January. The DRI and EAF facility is on track for a 4Q 2026 startup, with the project remaining within its $2.7 billion budget. Pablo Brizzio, CFO, acknowledged that Ternium is not comfortable with the current complex corporate structure and views simplification as a long-term goal, though it's not a straightforward process and depends on future analysis and external factors.

Rafael Barcellos, Head of LatAm Metals and Mining, Pulp and Paper, and Cement and Senior Equity Research Analyst at Bradesco BBI, inquired about Ternium's comfort level with its current shareholder structure across regions, given past efforts to simplify it. He also requested an update on the Pesquería project, including expected startup timelines, CapEx estimates, and any changes to the commercial strategy.

Answer

Pablo Brizzio, Ternium's Chief Financial Officer, stated that the company is not comfortable with its current shareholder structure and views simplification as a long-term objective, though its execution is complex and dependent on external factors. Máximo Vedoya, Ternium's Chief Executive Officer, provided an update on the Pesquería project, confirming that the new galvanized line will begin its running curve in December and the new PLTCM (cold rolling mill) in January, both on schedule. The DRI and EAF facility remains on track for a Q4 2026 startup, with the project budget holding firm at $2.7 billion. No changes to the commercial strategy for the project were mentioned.

Rafael Barcellos of Bradesco BBI inquired about Ternium's CapEx cycle, asking when the peak spending would occur and for an update on the Pesqueria project's execution. He also asked about the broader capital allocation strategy, including the outlook for dividends and the company's appetite for further investment in Brazil given current market difficulties.

Answer

CEO Máximo Vedoya confirmed that Q2 2025 was the peak quarter for the current CapEx cycle and provided a declining forecast for subsequent years, affirming the Pesqueria project is on time. CFO Pablo Brizzio reiterated the commitment to sustaining the current dividend level while funding the significant CapEx plan. CEO Vedoya added that Brazil needs to address unfair trade before attracting more investment.

Rafael Barcellos from Bradesco BBI inquired about Ternium's CapEx cycle, asking when the peak would occur and for an update on the Pesqueria project's execution. He also asked about the company's broader capital allocation strategy, including the potential for dividend increases and the appetite for further investment in Brazil given its market challenges.

Answer

CEO Máximo Vedoya identified Q2 2025 as the peak CapEx quarter, with spending projected to be $2.5-$2.6 billion for the full year before declining in 2026 and 2027. He confirmed the Pesqueria project is on schedule. CFO Pablo Brizzio stated the capital allocation priority is funding the current investment plan while sustaining the dividend. Vedoya added that Brazil must address unfair trade before attracting further investment.

Rafael Barcellos asked Rogério Nogueira about Vale's mid-grade volume strategy for the year, particularly with increased product from Carajás, and the company's outlook on the freight market, including potential impacts on costs despite Vale's protection from short-term volatility. For Gustavo Pimenta, he inquired about Vale's positioning amidst active M&A news flow in the sector, and how potential discussions involving Rio Tinto and Glencore might affect Vale's partnership with Glencore in the Victor operation in Canada, as well as future Canadian partnerships.

Answer

Rogério Nogueira, EVP of Commercial and Development, Vale, stated that mid-grade product volumes from Carajás are expected to be 40-50 million tons this year, adjusted based on market demand to maximize total contribution rather than just volume or price. He noted that Vale's revised freight strategy has resulted in very low exposure to the spot market, limiting impact and increasing competitive position. Gustavo Pimenta, CEO of Vale, emphasized that the company believes in capturing more value by developing its unique endowment, which offers projects with below-average capital intensity. He acknowledged constant evaluation of M&A opportunities but highlighted that Vale's current trading discount to peers makes developing its own assets a more accretive long-term strategy, focusing on delivering growth with strong shareholder remuneration.

Rafael Barcellos asked Rogério Nogueira about Vale's mid-grade volume strategy for the year, particularly with increased Carajás product, and the dynamics of the freight market, including its potential impact on Vale's cost curve. He then asked Gustavo Pimenta about Vale's positioning amidst active M&A news flow in the sector, and how potential M&A involving Rio Tinto and Glencore could affect Vale's partnership with Glencore in the Victor operation in Canada, as well as future Canadian partnerships.

Answer

Rogério Nogueira, EVP of Commercial and Development, Vale S.A., stated that Vale expects 40-50 million tons of mid-grade products from Carajás this year, with the ultimate volume dependent on market demand. He emphasized adjusting product offerings to maximize total contribution, not just volume or price. Regarding freight, Nogueira acknowledged rising future freight rates but noted that Vale's revised strategy and very low exposure to the spot market limit the impact, potentially increasing its competitive position. Gustavo Pimenta, CEO of Vale S.A., reiterated that Vale believes in capturing more value by developing its unique endowment, which offers projects with below-average capital intensity and cost. He acknowledged constantly evaluating M&A but noted that Vale's current trading discount to peers makes developing its own assets more accretive. Pimenta expressed optimism in delivering growth with competitive capital intensity while providing strong shareholder remuneration, aiming for a long-term portfolio of 260 million tons of iron ore and 700 kilotons of copper.

Rafael Barcellos asked how new volumes from the Capanema and Serra Azul projects will impact Vale's commercial strategy and requested the company's outlook on the iron ore market for the second half of the year.

Answer

Rogério Nogueira, EVP of Commercial & Development, explained that the new volumes will be integrated into the broader portfolio to enhance flexibility and value optimization. On the market outlook, he described the global iron ore market as 'balanced,' noting that while Chinese steel exports are impacting other regions, strong demand growth in India is providing a positive offset.

Rafael Barcellos inquired about the current health of the iron ore market, particularly feedback from China, and how macroeconomic uncertainties are influencing Vale's capital allocation strategy. He also asked for details on Vale's evolving commercial strategy regarding its product mix.

Answer

Executive Gustavo Duarte Pimenta stated that Vale's capital allocation is focused on cost efficiency and discipline amid a fluid macro environment. Executive Rogério Nogueira provided a detailed market outlook, describing China as a mix of 'confidence and caution' with improving steel margins but a struggling property sector. He noted that the global supply-demand for iron ore appears balanced, expecting prices to hold around $100 per ton.

Rafael Barcellos asked for management's perspective on the company's evolution in cost performance, commercial strategy, and institutional relationships. He also requested more detail on the strategy behind the expected increase in iron ore inventories.

Answer

Executive Gustavo Duarte Pimenta expressed high optimism, citing the best operational performance in five years, which allows for a stronger focus on cost and capital allocation. Executive Rogério Nogueira explained that the inventory increase is a temporary result of maximizing cash flow by concentrating more ore outside Brazil, which has a longer production-to-sale cycle. This strategy provides flexibility and is not indefinite.

Rafael Barcellos sought to understand the key developments that led to Suzano's notably more positive tone regarding the pulp market compared to previous interactions. He also asked João Alberto Fernandez de Abreu, CEO, about the expected highlights for the paper division in 2026, following significant developments in 2025 such as the KC acquisition, positive EBITDA in U.S. paperboard, and a new tissue mill in Brazil.

Answer

Leonardo Grimaldi, Executive Officer of Commercial Pulp, People & Management, attributed the positive tone to the intensification of forestry license revocations in Indonesia (directly impacting pulp/paper, leading to immediate curtailments and wood dynamics pressure) and the delay of the OKI 2 project startup to Q4 2026, meaning no new market pulp volumes in 2026. João Alberto Fernandez de Abreu, CEO, highlighted that for 2026, the tissue business aims to increase return and extract value from the Hangi investment. The Pine Bluff operation in the U.S. will focus on moving from positive EBITDA to generating cash. For the KC JV, key priorities are finalizing the complex carve-out process on time and initiating value creation streams.

Rafael Barcellos from Bradesco BBI sought clarification on the key developments that led to Suzano's more positive tone regarding the pulp market compared to previous interactions. He also asked CEO Beto Abreu about the expected highlights for the paper division in 2026, considering the significant developments in 2025, such as the KC acquisition, the first positive EBITDA in U.S. paperboard assets, and the new tissue mill in Brazil.

Answer

Leonardo Grimaldi, Executive Officer of Commercial Pulp, People & Management, attributed the positive tone to two major supply-side changes: the intensification of forestry license revocations in Indonesia directly impacting pulp and paper, leading to immediate curtailments and increased woodchip demand; and the delay of the APP OKI project startup from Q2 to Q4 2026, meaning no new market pulp volumes are expected in 2026, while a new board machine will require additional pulp. João Alberto Fernandez de Abreu, CEO, highlighted for 2026 the expectation of increased returns and better ROIC from the tissue business (Hygiene) in Aracruz, continued progress in generating cash from the Pine Bluff U.S. paperboard business, and for the KC JV, successful carve-out finalization and value creation from the start of operations.

Rafael Barcellos asked for an outlook on Suzano's US packaging business, including expected EBITDA contribution for the next year and its long-term potential. He also sought an update on Suzano's investment in Lenzing, specifically regarding the option to acquire an additional stake and how the company views Lenzing's role in its portfolio after roughly a year.

Answer

Joao Alberto Fernandez De Abreu, CEO, stated that Suzano is not considering exercising the call option for Lenzing in the short term, preferring to continue analyzing the dissolving pulp market's competitive environment. For the US packaging business, he expressed satisfaction with anticipating the business plan and achieving positive EBITDA through commercial, procurement, and logistics initiatives, emphasizing learning for future ventures like the KCJV, but did not disclose specific financial projections.

Rafael Barcellos asked for confirmation on the potential 100-150k ton production increase at the Ribas mill without new CapEx, its timing, and the outlook for the U.S. packaging business, including its path to positive EBITDA and future investment plans.

Answer

CEO João Alberto Fernandez de Abreu confirmed the Ribas mill's potential for higher production with no CapEx, contingent on market conditions. EVP of Paper & Packaging, Fabio Almeida de Oliveira, stated the U.S. packaging business is on track for positive EBITDA in Q3, driven by cost reductions, contractual price hikes, and market expansion, with full benefits expected by 2026.

Rafael Barcellos inquired about pulp sales volumes, asking for the scale of the inventory buildup in Q1 and the outlook for sales in April, May, and the full year 2025. He also asked for an evaluation of the Hibas mill's operational performance post-maintenance and whether any debottlenecking or brownfield projects are being considered.

Answer

Leonardo Grimaldi, an executive, confirmed an inventory rebuild of approximately 200,000 tons in Q1. While not providing specific forward guidance, he noted that with inventories normalized and the Cerrado project online, sales volumes are expected to be higher than in corresponding quarters of previous years. Beto Abreu, an executive, reported that the Hibas mill is performing very well and meeting all planned metrics. He stated that while short-term brownfield investments are not being considered, they are generally more attractive than greenfield projects for long-term capacity expansion.

Rafael Barcellos of Bradesco BBI asked about the operational progress at the Ribas mill, specifically regarding debottlenecking opportunities and cost evolution. He also followed up on capital allocation, inquiring about preferences for M&A across business lines like packaging, tissue, or pulp.

Answer

Executive João Fernandez de Abreu stated that the company is agnostic regarding business lines for M&A, with decisions driven by scalability, differentiation, and strategic fit. Executive Aires Galhardo noted it is too early to discuss debottlenecking at Ribas but expressed optimism about the asset's robust performance, having completed its learning curve ahead of schedule.

Rafael Barcellos asked new CEO Beto Abreu for his initial conclusions on the company's strengths and areas for improvement. He also requested an outlook on cost evolution for the second half of the year, particularly with the Cerrado project coming online.

Answer

CEO Beto Abreu shared positive initial impressions, highlighting the company's strong execution, operational focus, cost discipline, and reliable facilities, stating his focus would be on people, strategy, and capital allocation. Executive Aires Galhardo projected a low single-digit increase in cash cost for Q3 due to FX and the Cerrado start-up, but expects improvement in Q4 and beyond as the new mill ramps up.

Rafael Barcellos asked for details on the new rolling mill's ramp-up in Ouro Branco, including operational costs and market impact. He also inquired about the competitive scenario for long steels in April and Gerdau's strategic view on the rebar segment, including potential divestment.

Answer

CEO Gustavo Werneck expressed confidence in the Ouro Branco ramp-up, expecting costs to normalize by Q3 and stating the added volume is not large enough to pressure market prices. Regarding rebars, he clarified it's a shrinking part of the portfolio but that Gerdau is strategically focused on regaining market share in its traditional distribution space. He asserted that the company's strong balance sheet allows it to prioritize market share over short-term profitability in this segment.

Rafael Barcellos asked for Gerdau's strategic view on the Brazilian market, particularly concerning new rebar capacity from competitors and the potential for market consolidation. He also followed up on U.S. tariffs, seeking an update on potential investments in Mexico and Gerdau's growth prospects in the United States.

Answer

CEO Gustavo Werneck stated that the Brazilian rebar market is challenging and not a focus for new capacity investments; instead, capital is being directed towards flat steel and mining to enhance competitiveness. CFO Rafael Japur noted that the new tariff environment makes a greenfield project in Mexico more difficult, with a decision expected by June. He emphasized that North American growth is centered on special steels and merchant bars through investments in the Monroe and Midlothian plants.

Rafael Barcellos of Bradesco BBI asked for details on CSN's strategic plan amid the global 'trade war,' questioning the flexibility to postpone projects and the potential for M&A in the steel sector. He also requested a forecast for the steel segment's cost and margin evolution in the first half of the year.

Answer

Luis Martinez, Executive, projected that the steel segment would maintain a double-digit EBITDA margin in the first quarter, driven by continued cost reduction efforts and recent price increases. Antonio Marco Rabello, Executive, stated that the 2025 CapEx level would be similar to 2024, with the P15 mining project and steel plant reorganization being non-negotiable priorities. He emphasized that while minor projects have flexibility, the company's diversification into cement and infrastructure are key to its long-term strategy, and significant M&A is not a current focus.

Rafael Barcellos asked about CSN's strategic plan amid the global trade war, questioning the flexibility on project timelines and the possibility of M&A in the steel sector. He also requested a follow-up on the steel segment's expected performance, focusing on costs and margins for the first half of the year.

Answer

Luis Martinez, an executive, stated that the steel segment's EBITDA improvement was driven by cost reduction, a focus that will continue. He expects to maintain double-digit EBITDA margins in the first quarter. Antonio Marco Rabello, an executive, added that the group's strategy involves diversification into cement and infrastructure. He confirmed that while there is flexibility to postpone minor projects, the P15 mining project and the steel plant reorganization remain top priorities and will not be delayed.

Rafael Barcellos requested an overview of the regulatory environments in Mexico and Peru, particularly concerning growth initiatives and potential restrictions on open-pit mining in Mexico. He also asked for the company's copper production forecast for 2025.

Answer

Executive Raul Jacob described Peru's regulatory environment as improving, with efforts to shorten permit times. In Mexico, he stated that recent changes have not affected SCCO's existing concessions and that any new open-pit mining rules are not expected to apply retroactively. For 2025, he forecast copper production at 978,300 tons, with significant increases in zinc and silver production as well.