Core Viewpoint - Countries are urging the president to adhere to agreements made in the previous year, while some nations are expressing discontent over U.S. claims of unfair trade practices [1] Group 1 - Countries are pushing for the president to maintain commitments from last year's deals [1] - There is a growing frustration among some countries regarding U.S. allegations of unfair trade practices [1]

Core Viewpoint - GrafTech International Ltd. has filed a trade petition with the Brazilian government to investigate unfair pricing of graphite electrode imports from China and India, which may be impacting the domestic steel industry in Brazil [1] Group 1: Trade Petition and Investigation - GrafTech has submitted a petition to Brazil's Department of Trade Defense (DECOM) requesting an investigation into the alleged dumping of graphite electrodes from China and India [1] - DECOM has initiated an investigation and found preliminary dumping margins of 54.9% for China and 57.3% for India, indicating sufficient evidence to warrant further inquiry [1] - The investigation focuses on graphite electrodes with diameters of 350 millimeters or greater, as specified in the petition [1] Group 2: Industry Context and Importance - Brazil produced approximately 33.3 million tons of crude steel in 2025, ranking as the ninth-largest steel producer globally, highlighting the significance of fair pricing in the graphite electrode market [1] - Ensuring fair pricing for graphite electrodes is crucial for maintaining a reliable supply for Brazil's electric arc furnace steel producers and supporting the competitiveness of the domestic steel industry [1] Group 3: Company Position and Commitment - GrafTech Brasil Participações Ltda., the Brazilian subsidiary of GrafTech, has been operating for over 50 years and is the only large-scale graphite electrode producer with manufacturing operations in Brazil [1] - The CEO of GrafTech expressed confidence in DECOM's ability to conduct a thorough investigation and take appropriate actions against any identified unfair trade practices [1]

Core Insights - The U.S. has initiated extensive trade investigations targeting China, adding tension to the upcoming summit between U.S. President Donald Trump and Chinese President Xi Jinping [1][2][7] Trade Investigations - The investigations are conducted under Section 301 of the Trade Act of 1974, focusing on identifying unfair trade practices, particularly in manufacturing sectors [2][5] - The U.S. Supreme Court's recent decision to strike down Trump's "reciprocal" tariffs has prompted the administration to pivot to other tools, including these investigations, to maintain pressure on China [4][5] Economic Context - Despite global criticism regarding its reliance on external demand, China's exports increased by 21.8% in the first two months of the year, resulting in a trade surplus of $213.6 billion [6] - The investigations introduce new uncertainties into the already fragile trade truce between the U.S. and China, complicating the diplomatic landscape ahead of the summit [7][8] Geopolitical Factors - U.S. military actions in Iran have raised concerns about China's energy supplies, further complicating its position in the bilateral talks [8][9] - The volatile situation in the Strait of Hormuz, a critical oil supply route, poses risks for China, which is a major buyer of Iranian crude [10][11]

Financial Data and Key Metrics Changes - Ternium reported a net income of $171 million for the fourth quarter of 2025, with adjusted EBITDA slightly declining sequentially, in line with expectations [13][14] - The EBITDA margin reached 10% for the year, supported by a cost reduction program that generated $250 million in savings [4][18] - Cash generated by operations in 2025 was strong at $2.3 billion, allowing the company to finance capital expenditures [18] Business Line Data and Key Metrics Changes - The steel segment experienced a decline in shipments due to weaker volumes in the U.S. and Brazil, although higher volumes were noted in Mexico [15][16] - Mining cash operating income increased sequentially, driven by stronger shipments and higher realized iron ore prices [16] Market Data and Key Metrics Changes - Apparent consumption of steel in Mexico decreased by 10% in 2025, with flat products consumption down 14% compared to 2024 [23] - The U.S. implemented significant trade measures against unfair practices from China, impacting the global steel market [5][9] Company Strategy and Development Direction - Ternium is focusing on enhancing operational efficiency and reducing costs while expanding its footprint in Mexico with new facilities [8][11] - The company is optimistic about profitability improvements in 2026, driven by cost reductions and favorable trade policies [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a fatal accident at Ternium Mexico and emphasized the importance of safety [4] - The outlook for the Mexican market is cautiously optimistic, with expectations of a 4% growth in 2026 despite current low demand levels [23][24] Other Important Information - Ternium secured a $1.25 billion loan through a green financing facility to support its new projects, which received several awards [8][9] - The company proposed an annual dividend of $2.7 per ADS for fiscal year 2025, maintaining the same level as 2024 [18] Q&A Session Summary Question: Outlook for the Mexican market and recovery path - Management noted that demand in Mexico was significantly low in 2025, with expectations of a 4% market growth in 2026, aiming to gain market share against imports [23][24] Question: Impact of anti-dumping measures in Brazil - Management indicated that the impact of anti-dumping measures would be gradual, with expectations of a moderate increase in domestic prices [22][25] Question: Ternium's plan if USMCA is not renewed - Management stated that they operated in 2025 under the assumption of no renewal and would continue to adapt to the environment [30][34] Question: Volume expectations for 2026 - Management expects volumes to increase in Mexico, while the southern region may see recovery in the second half of the year [35][36] Question: Margin potential without USMCA changes - Management expressed that margins could improve, but the full impact of USMCA negotiations would likely be seen in 2027 [40][79] Question: Capital allocation priorities - Management confirmed that both increasing dividends and exploring growth opportunities in key markets are priorities [86]

Financial Data and Key Metrics Changes - Ternium reported a net income of $171 million for Q4 2025, with a slight sequential decline in adjusted EBITDA, which remained stable [13][14] - The EBITDA margin reached 10% for the year, with a cash generation from operations of $2.3 billion, allowing the company to finance capital expenditures [4][18] - The company achieved $250 million in savings through cost reduction and efficiency programs in 2025 compared to 2024 [4] Business Line Data and Key Metrics Changes - The steel segment saw a decline in shipments primarily due to weaker volumes in the U.S. and Brazil, although higher volumes were recorded in Mexico [14][15] - Mining cash operating income increased sequentially due to stronger shipments and higher realized iron ore prices, partially offset by higher unit costs [15] Market Data and Key Metrics Changes - In Mexico, apparent consumption of steel decreased by 10% in 2025, with flat products consumption down 14% compared to 2024 [23] - The U.S. implemented significant trade measures against unfair practices from China, impacting the global steel market [5][9] - Brazil's recent anti-dumping measures and increased import taxes on steel products represent a significant shift in the market environment [9] Company Strategy and Development Direction - Ternium is focusing on enhancing regional integration and has expanded its footprint in Mexico, investing in technology to offer high-value products [6][11] - The company has started production in new facilities, including a cold rolling mill and a galvanized line, aimed at producing high-quality automotive steel [7][8] - Ternium aims to improve profitability in 2026, driven by cost reductions and operational efficiency [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Ternium's outlook for the coming years, expecting profitability to improve in 2026 despite ongoing trade issues [10][11] - The company is actively participating in discussions regarding trade frameworks to ensure fair competition and support local producers [5][6] Other Important Information - Ternium's board proposed an annual dividend of $2.7 per ADS for fiscal year 2025, maintaining the same level as 2024, reflecting confidence in the company's prospects [18] - The company secured a $1.25 billion loan through a green financing facility to support its projects, receiving multiple awards for this initiative [8] Q&A Session Summary Question: Outlook for the Mexican market and demand recovery - Management noted that demand in Mexico was significantly low in 2025, with expectations of a 4% market growth in 2026, driven by local steel mills gaining market share against imports [21][23][24] Question: Impact of anti-dumping measures in Brazil - Management indicated that the impact on pricing dynamics would be gradual, with expectations for a moderate increase in domestic prices [22][26] Question: Ternium's plan if USMCA is not renewed - Management stated that they operated in 2025 under the assumption of no renewal and would continue to adapt to the environment, focusing on market share growth [31][34] Question: Expectations for Ternium's volumes in 2026 - Management expects volumes to increase in Mexico, while the southern region may see recovery in the second half of the year [36][37] Question: Margin potential without USMCA changes - Management believes there is potential for margins to improve, aiming for a return to the 15%-20% range, but acknowledges that this may take time [41][46][86] Question: Capital allocation priorities - Management emphasized that both increasing dividends and pursuing growth opportunities in key markets are priorities [88][89]