Financial Data and Key Metrics Changes - Ternium's EBITDA margin reached 10% in 2025, supported by a cost reduction program that generated $250 million in savings compared to 2024 [4] - Net income for the fourth quarter totaled $171 million, impacted by one-time charges related to an impairment in one of its mining operations [13][14] - Cash generated by operations reached $2.3 billion in 2025, 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 US and Brazil, but higher volumes in Mexico partially offset this decline [15] - 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 Mexican government raised import tariffs on steel from 25% to 35%, aiming to protect local producers [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] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of ongoing trade negotiations in North America and expressed confidence in reaching a mutually beneficial agreement [10][11] - The company is cautious about the timing of the USMCA renewal, projecting it may not significantly impact 2026 but could be more relevant in 2027 [24][25] Other Important Information - Ternium secured a $1.25 billion loan through a green financing facility to support its new projects, which received several awards for sustainability [8][9] - The company proposed an annual dividend of $2.7 per ADS for fiscal year 2025, maintaining the same level as 2024, reflecting confidence in future prospects [18] 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 for a 4% market growth in 2026, driven by local steel mills gaining market share [23][24] Question: Impact of anti-dumping measures in Brazil - Management indicated that the impact of anti-dumping measures 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 without a renewed USMCA and would continue to adapt to the environment, focusing on market share gains [30][34] Question: Volume expectations for 2026 - Management expects volume increases in Mexico, with a recovery in Argentina anticipated in the second half of the year, while Brazil is expected to maintain healthy volume levels [35][36] Question: Margin potential without USMCA changes - Management expressed that they expect to enhance margins in 2026, aiming for a return to the 15%-20% range, but acknowledged that this would depend on market conditions [40][44] Question: Capital allocation priorities - Management confirmed that both increasing dividends and exploring growth opportunities in key markets are priorities, with no immediate plans for share buybacks [87]

Summary of Key Points Core Viewpoint - The article discusses the current economic indicators and trends in various sectors, highlighting the liquidity situation, construction and real estate chains, industrial products, pricing dynamics, and export conditions, with a focus on potential investment opportunities and market movements. Group 1: Liquidity - The BCI small and medium enterprise financing environment index for January 2026 is at 50.27, an increase of 6.62% month-on-month [3] - The M1 and M2 growth rate difference was -4.7 percentage points in December 2025, a decrease of 1.60 percentage points month-on-month [3] - The current price of London gold is $4,981 per ounce [3] Group 2: Infrastructure and Real Estate Chain - The capacity utilization rate of blast furnaces is expected to be at the highest level for January in five years [4] - Weekly price changes include rebar down 1.81%, cement price index down 0.87%, rubber down 0.32%, coke unchanged, coking coal up 1.07%, and iron ore down 2.92% [4] - National blast furnace capacity utilization rate increased by 0.36 percentage points, while cement and asphalt operating rates decreased by 4.30 percentage points and increased by 3.7 percentage points, respectively [4] Group 3: Real Estate Completion Chain - The prices of titanium dioxide and glass are at low levels, with titanium dioxide price increasing by 0.76% and glass price decreasing by 0.73% [5] - The gross profit for titanium dioxide is -1,740 yuan per ton, while the flat glass operating rate is 73.89% [5] Group 4: Industrial Products Chain - Major commodity price changes include cold-rolled steel down 1.55%, copper down 0.71%, and aluminum up 0.54%, with corresponding gross profit changes showing a turnaround to profit for cold-rolled steel and an increase in losses for copper and aluminum [6] - The national semi-steel tire operating rate is at 74.56%, an increase of 1.12 percentage points [6] Group 5: Specific Products - The price of oriented silicon steel has reached a new low since 2018 [7] - The price of graphite electrodes is 19,000 yuan per ton, unchanged, with a gross profit of 2,001.58 yuan per ton [7] - The price of electrolytic aluminum is 24,130 yuan per ton, with a profit of 6,911 yuan per ton (excluding tax), an increase of 1.83% [7] Group 6: Price Comparison Relationships - The price ratio of London spot gold to silver has reached the lowest level since 2013 [8] - The price ratio of rebar to iron ore is 4.01, and the price difference between hot-rolled and rebar steel is 70 yuan per ton [8] - The price difference between small rebar (mainly used in real estate) and large rebar (mainly used in infrastructure) is 150 yuan per ton, a decrease of 25% from the previous week [8] Group 7: Export Chain - The new export orders PMI for China in December is 49.00%, an increase of 1.4 percentage points month-on-month [9] - The CCFI comprehensive index for container shipping rates is 1,208.75 points, a decrease of 0.09% [9] - The U.S. crude steel capacity utilization rate is 75.90%, an increase of 0.20 percentage points [9] Group 8: Valuation Percentiles - The CSI 300 index decreased by 0.62%, with the best-performing cyclical sector being oil and petrochemicals, which increased by 7.71% [10] - The PB ratio of ordinary steel and industrial metals relative to the PB of the Shanghai and Shenzhen markets is 34.11% and 100.00%, respectively [10] - The current PB ratio of the ordinary steel sector relative to the Shanghai and Shenzhen markets is 0.51, with the highest value since 2013 being 0.82 [10]

Summary of Key Points Core Viewpoint - The report highlights the current economic indicators and trends affecting various sectors, particularly focusing on financing conditions, construction, real estate, and industrial products, indicating a mixed outlook for the economy in December 2025. Group 1: Liquidity - The BCI small and medium enterprise financing environment index for December 2025 is at 47.15, a decrease of 10.19% month-on-month [4] - The M1 and M2 growth rate difference in November 2025 is -3.1 percentage points, down by 1.1 percentage points from the previous month [4] - The current price of London gold is $4,333 per ounce [4] Group 2: Infrastructure and Real Estate Chain - The national steel PMI new orders index for December decreased by 3.5 percentage points to 45.4% [5] - Weekly price changes include rebar up by 1.22%, cement price index down by 0.06%, rubber up by 0.33%, and iron ore up by 1.77% [5] - National blast furnace capacity utilization rate, cement, and asphalt operating rates changed by -0.39 percentage points, +12.41 percentage points, and -2.4 percentage points respectively [5] Group 3: Real Estate Completion Chain - Prices for titanium dioxide and glass are at low levels, with titanium dioxide price unchanged and flat glass down by 1.09% [6] - The gross profit for titanium dioxide is -1,744 yuan per ton, while the flat glass operating rate is at 73.89% [6] Group 4: Industrial Products Chain - The national PMI new orders index for December stands at 50.80% [7] - Major commodity price changes include cold-rolled steel down by 0.26%, copper down by 0.32%, and aluminum up by 0.50% [7] - The operating rate for semi-steel tires is at 69.35%, down by 2.70 percentage points [7] Group 5: Subcategories - The price of graphite electrodes is at 19,000 yuan per ton, unchanged, with a gross profit of 2,094.1 yuan per ton, up by 1.63% [8] - The price of electrolytic aluminum is 22,170 yuan per ton, up by 0.50%, with a calculated profit of 5,015 yuan per ton (excluding tax), up by 1.98% [8] - The price of tungsten concentrate is 454,500 yuan per ton, down by 1.30% from the previous week [8] Group 6: Price Comparison Relationships - The price ratio of rebar to iron ore is 4.04 this week [10] - The price difference between hot-rolled and rebar steel is -30 yuan per ton [10] - The price difference between small rebar (mainly used in real estate) and large rebar (mainly used in infrastructure) is 300 yuan per ton, up by 50% from last week [10] Group 7: Export Chain - The new export orders PMI for China in December is 49.00%, an increase of 1.4 percentage points [11] - The CCFI comprehensive index for container shipping rates is 1,146.67 points, up by 1.95% [11] - The Ministry of Commerce and the General Administration of Customs announced that from January 1, 2026, certain steel products will be subject to export license management, which is expected to further regulate steel exports [11] Group 8: Valuation Percentiles - The CSI 300 index decreased by 0.59%, with the best-performing cyclical sector being oil and gas, up by 3.92% [12] - The PB ratio of ordinary steel and industrial metals relative to the PB of the two markets is 31.57% and 100.00% respectively [12] - The current PB ratio of the ordinary steel sector relative to the two markets is 0.51, with the highest value since 2013 being 0.82 [12]

Liquidity - Gold prices reached a new high since November 2025, with the current price at $4,341 per ounce [4] - The BCI small and medium enterprise financing environment index for November 2025 is 52.50, up 0.17% month-on-month [4] - The M1 and M2 growth rate difference was -3.1 percentage points in November 2025, down 1.10 percentage points month-on-month [4] Infrastructure and Real Estate Chain - The capacity utilization rate of blast furnaces has been below the same period last year for three consecutive weeks [5] - Price changes this week include rebar up 2.15%, cement price index up 0.35%, rubber up 1.01%, and iron ore up 1.27% [5] - National capacity utilization rates for blast furnaces, cement, and asphalt are down 0.99 percentage points, 1.56 percentage points, and up 9.0 percentage points respectively [5] Real Estate Completion Chain - Titanium dioxide gross profit is at a low level, with a gross profit of -1,795 yuan per ton [6] - Prices for titanium dioxide and glass remained unchanged this week, with flat glass operating rate at 73.99% [6] Industrial Products Chain - The operating rate of semi-steel tires is at the median level for the past five years [7] - Major commodity price performance this week includes cold-rolled steel down 0.95%, copper down 1.37%, and aluminum down 1.04% [8] - The national semi-steel tire operating rate is 71.39%, down 0.18 percentage points [8] Subcategories - Tungsten concentrate prices reached a new high since 2012, with a price of 433,000 yuan per ton, up 15.78% week-on-week [9] - The price of electrolytic aluminum is 21,840 yuan per ton, down 1.04%, with estimated profit at 4,608 yuan per ton (excluding tax), down 3.16% [9] - The price of electrolytic copper is 92,680 yuan per ton, down 1.37% [9] Price Comparison Relationships - The price ratio of rebar to iron ore is 4.05 this week, with the price difference between hot-rolled and rebar steel at -30 yuan per ton [10] - The price difference between Shanghai cold-rolled and hot-rolled steel is 450 yuan per ton, down 40 yuan per ton [10] - The price ratio of stainless steel hot-rolled to electrolytic nickel is 0.11 [10] Export Chain - The new export orders PMI for China in November is 47.60%, up 1.7 percentage points month-on-month [11] - The CCFI comprehensive index for container shipping rates is 1,124.73 points this week, up 0.60% [11] - The U.S. crude steel capacity utilization rate is 76.50%, up 0.80 percentage points [11] Valuation Percentiles - The CSI 300 index decreased by 0.28%, with the best-performing cyclical sector being chemicals, up 2.58% [12] - The PB ratio of ordinary steel and industrial metals relative to the PB of the Shanghai and Shenzhen markets is 34.35% and 97.80% respectively [12] - The current PB ratio of the ordinary steel sector relative to the Shanghai and Shenzhen markets is 0.51, with the highest value since 2013 being 0.82 [12]

Core Viewpoint - The report highlights the current state of various sectors, including liquidity, infrastructure, real estate, industrial products, and export chains, providing insights into price changes, production rates, and market conditions. Liquidity - The BCI small and medium enterprise financing environment index for November 2025 is 52.50, with a month-on-month increase of 0.17% [4] - The M1 and M2 growth rate difference in October 2025 is -2.0 percentage points, a decrease of 0.80 percentage points from the previous month [4] - The current price of London gold is $4,219 per ounce [4] Infrastructure and Real Estate Chain - Total inventory of five major steel varieties is at the highest level for the same period in four years [5] - Price changes this week include rebar up by 0.93% and cement price index up by 0.22%, while rubber decreased by 0.34% and coking coal by 3.14% [5] - National blast furnace capacity utilization rate, cement, and asphalt operating rates have changed by -0.60 percentage points, -1.27 percentage points, and +8.1 percentage points respectively [5] Real Estate Completion Chain - Prices of titanium dioxide and flat glass remain stable, with glass gross profit at -58 yuan/ton and titanium dioxide gross profit at -4,026 yuan/ton [6] - The operating rate for flat glass this week is 74.52% [6] Industrial Products Chain - Major commodity price changes this week include cold-rolled steel down by 0.25%, copper up by 1.77%, and aluminum up by 0.33% [7] - The gross profit for cold-rolled steel has turned from loss to profit, while the losses for other commodities have increased by 1.86% and 1.49% respectively [7] - The national semi-steel tire operating rate is 69.19%, a decrease of 1.88 percentage points [7] Subcategories - Tungsten concentrate prices have reached a new high since 2012, currently at 339,000 yuan/ton, with a week-on-week increase of 3.04% [8] - The price of graphite electrodes is 18,500 yuan/ton, with a gross profit of 1,357.4 yuan/ton, down by 17.59% [8] - The price of electrolytic aluminum is 21,430 yuan/ton, with estimated profit at 4,223 yuan/ton (excluding tax), up by 1.49% [8] Price Comparison Relationships - The price ratio of rebar to iron ore this week is 4.08 [10] - The price difference between hot-rolled and rebar steel is 40 yuan/ton, while the price difference between cold-rolled and hot-rolled steel is 490 yuan/ton, down by 50 yuan/ton [10] - The price ratio of stainless steel hot-rolled to electrolytic nickel is 0.11 [10] Export Chain - The new export orders PMI for China in October 2025 is 45.90%, a decrease of 1.9 percentage points [11] - The CCFI comprehensive index for container shipping rates is 1,121.80 points, down by 0.09% this week [11] - The capacity utilization rate for crude steel in the U.S. is 76.90%, an increase of 0.70 percentage points [11] Valuation Percentiles - The CSI 300 index has increased by 1.64%, with the best-performing cyclical sector being industrial metals, up by 3.46% [12] - The PB ratio of ordinary steel and industrial metals relative to the CSI 300 is 37.40% and 86.64% respectively [12] - The current PB ratio for the ordinary steel sector relative to the CSI 300 is 0.53, with the highest value since 2013 being 0.82 [12]

Investment Rating - The report maintains an "Overweight" rating for the steel and non-ferrous metals sectors [6] Core Viewpoints - The report highlights a significant decline in the price of oriented silicon steel, with a year-to-date drop of 23% [3] - The financing environment for small and medium enterprises improved in October 2025, with the BCI index rising by 10.15% to 52.41 [11] - The construction and real estate sectors are facing challenges, with new construction area down 19.80% year-on-year from January to October 2025 [22] - The steel sector's profitability is expected to recover to historical average levels, supported by government policies aimed at phasing out outdated production capacity [4] Summary by Sections Liquidity - The BCI index for small and medium enterprises in October 2025 is 52.41, up 10.15% month-on-month [11] - The M1 and M2 growth rate difference was -2.0 percentage points in October 2025, down 0.80 percentage points from the previous month [19] - The current price of London gold is $4082 per ounce, reflecting a 2.05% increase from the previous week [11] Infrastructure and Real Estate Chain - The cumulative year-on-year new construction area in the real estate sector from January to October 2025 is down 19.80% [22] - The price changes for key materials include rebar down 0.94% and cement price index down 0.76% [2] - The cumulative year-on-year completion area for commercial housing from January to October 2025 is down 16.90% [78] Industrial Products Chain - The operating rate for semi-steel tires is at a five-year high, with a current rate of 73.68%, up 0.01 percentage points [2] - Major commodity price changes include cold-rolled steel down 1.00%, copper up 1.11%, and aluminum up 1.44% [2] Export Chain - The PMI new export orders for China in October 2025 is 45.90%, down 1.9 percentage points [4] - The CCFI composite index for container shipping rates is 1094.03 points, up 3.39% [4] Valuation Metrics - The report notes that the PB ratio for the steel sector relative to the broader market is currently at 0.56, with the highest historical value being 0.82 [4] - The report suggests that the profitability of the steel sector is likely to recover, which could lead to an improvement in the PB ratio [4]

Summary of Key Points Core Viewpoint - The report highlights significant trends in liquidity, infrastructure, real estate, and industrial sectors, indicating a mixed economic outlook with specific areas of concern such as low PMI indices and fluctuating commodity prices. Group 1: Liquidity - The BCI small enterprise financing environment index for August 2025 is at 46.37, showing a month-on-month increase of 0.61% [4] - The M1 and M2 growth rate difference is at -2.8 percentage points in August 2025, with a month-on-month increase of 0.4 percentage points [4] - The current price of London gold is at $4018 per ounce [4] Group 2: Infrastructure and Real Estate Chain - The steel PMI index for September is at 45.2%, marking a six-month low [5] - Weekly price changes include rebar up by 0.62%, cement price index down by 0.89%, rubber down by 1.35%, coke up by 3.65%, coking coal up by 0.30%, and iron ore down by 1.01% [5] - The average daily crude steel output from key enterprises in late September decreased by 8.88% month-on-month [5] Group 3: Real Estate Completion Chain - Prices for titanium dioxide and glass increased by 0.77% and remained unchanged, respectively, while glass gross profit is at -58 yuan/ton and titanium dioxide gross profit is at -1082 yuan/ton [6] - The operating rate for flat glass this week is at 76.01% [6] Group 4: Industrial Chain - The operating rate for semi-steel tires is at a five-year low of 46.51%, down by 27.07 percentage points [7] - Major commodity price changes include cold-rolled steel down by 0.50%, copper up by 5.02%, and aluminum up by 0.91% [7] Group 5: Subcategories - The capacity utilization rate for electrolytic aluminum continues to reach historical highs [8] - The price of electrolytic aluminum is at 21020 yuan/ton, with a calculated profit of 3854 yuan/ton (excluding tax), up by 5.14% month-on-month [8] - The price of electrolytic copper is at 86830 yuan/ton, up by 5.02% [8] Group 6: Price Relationships - The price ratio of London spot gold to silver has reached a 14-month low [9] - The price ratio of rebar to iron ore is at 4.06 this week [9] - The price difference between hot-rolled and rebar steel is 140 yuan/ton, while the price difference between cold-rolled and hot-rolled steel is 440 yuan/ton, up by 50 yuan/ton [9] Group 7: Export Chain - The new export orders PMI for China in September 2025 is at 47.80%, with a month-on-month increase of 0.6 percentage points [10] - The CCFI comprehensive index for container shipping rates is at 1014.78 points, down by 6.68% [10] - The capacity utilization rate for U.S. crude steel is at 77.20%, down by 0.90 percentage points [10] Group 8: Valuation Percentiles - The CSI 300 index decreased by 0.51%, with the best-performing sector being industrial metals, up by 5.35% [11] - The PB ratio for ordinary steel and industrial metals relative to the CSI 300 is at 40.18% and 97.52%, respectively [11] - The current PB ratio for the ordinary steel sector is 0.54, with the highest value since 2013 being 0.82 [11]

Group 1 - The European Commission has imposed a 12.1% anti-dumping duty on hot-rolled steel imports from Vietnam, as the Vietnamese steel industry is actively seeking to expand into the European market [1] - The decision exempts products produced by Hoa Phat Group [3] - The EU has also imposed anti-dumping duties on similar imported products from Japan and Egypt [3] Group 2 - The United States has imposed anti-dumping duties on cold-rolled steel imports from Vietnam and other countries, with the duty period set from July 2024 to June 2025 [4]

Group 1: Core Insights - Egypt has escalated anti-dumping measures against Chinese steel and aluminum products, imposing anti-dumping duties of up to 29% on cold-rolled, galvanized, and painted steel products [1] - Since 2021, Egypt has gradually imposed anti-dumping taxes on aluminum products, starting at 16.5% and currently reduced to 10.5%, significantly impacting exporting companies [1] Group 2: Trade Strategies - In the complex international trade environment, third-country transshipment trade has become a crucial strategy for Chinese companies, allowing them to circumvent high tariffs through neutral countries like Malaysia and Turkey [3] - Steel export companies are particularly affected by anti-dumping measures on cold-rolled and galvanized steel, and transshipment through Malaysia or Turkey can mitigate direct impacts [5] Group 3: Future Outlook - The future of Egypt's trade protection measures is expected to remain stringent, prompting Chinese steel and aluminum companies to diversify markets, ensure compliance in transshipment operations, and upgrade their industries to enhance competitiveness [5][6] - While third-country transshipment provides a temporary buffer, long-term success will depend on optimizing industry structure and adjusting market strategies [6]

Core Viewpoint - The report highlights the financial performance and operational strategies of Friend Co., Ltd. for the first half of 2025, showcasing growth in revenue and net profit, alongside a focus on enhancing operational efficiency and expanding production capabilities in the automotive and home appliance sectors [2][5][6]. Company Overview and Financial Indicators - Company Name: Friend Co., Ltd. [2] - Revenue for the first half of 2025 reached approximately 5.22 billion RMB, a 2.25% increase from the previous year [2]. - Total profit amounted to approximately 215.41 million RMB, reflecting a 33.28% increase year-on-year [2]. - Net profit attributable to shareholders was approximately 153.36 million RMB, up 30.53% compared to the same period last year [2]. - The company’s net assets totaled approximately 8.59 billion RMB at the end of the reporting period [2]. Industry and Main Business Analysis - The company operates in the metal processing and distribution sector, primarily serving the mid-to-high-end automotive and home appliance industries [3][4]. - The automotive and home appliance sectors are critical to China's economy, with significant growth in production and sales observed in the first half of 2025 [3]. - The automotive market saw production and sales of 15.62 million and 15.65 million vehicles, respectively, representing year-on-year growth of 12.5% and 11.4% [3]. - The company has established a "multi-to-multi" network collaboration model, enhancing supply chain efficiency by integrating upstream steel and aluminum suppliers with downstream automotive and appliance manufacturers [4][8]. Operational Strategies and Developments - The company has focused on optimizing internal production management and cost control to enhance operational efficiency [5]. - A total sales volume of 1.05 million tons was achieved in the reporting period, marking a 16.50% increase year-on-year [5]. - New processing bases are being established in Jiangsu and Sichuan to improve order response times and service capabilities [6]. - The company has invested in new production lines for aluminum extrusion and laser welding, aimed at enhancing product competitiveness and supporting lightweight automotive materials [6][7]. Competitive Advantages - The company has developed significant industry advantages, including a strong brand reputation and comprehensive service capabilities in the automotive metal processing sector [7][8]. - It maintains strategic partnerships with major steel and aluminum manufacturers, ensuring a reliable supply of materials [9]. - The company’s processing capacity is approximately 2.5 million tons annually, allowing it to meet diverse customer demands effectively [9].