Ternium's Strategic Expansion in Brazil's Steel Sector: Evaluating Investment Implications of Usiminas Control

In a bold move to consolidate its dominance in Latin America's steel industry, Ternium has announced plans to acquire the remaining stakes in Usinas Siderúrgicas do Grupo Control (Usiminas) held by Nippon Steel and Mitsubishi. This transaction, valued at $315.2 million, will increase Ternium's ownership from 51.5% to 83.1%, positioning the T/T group (comprising Ternium, Ternium Argentina, and Confab) to hold 92.9% of the control group, according to a StockTitan article. The deal, contingent on Brazil's antitrust approval, underscores Ternium's strategic intent to strengthen its foothold in Brazil's steel sector, a market poised for growth amid infrastructure and sustainability-driven demand.

Industry Dynamics: A Market on the Cusp of Transformation

Brazil's steel industry is at a pivotal juncture. According to an IMARC Group report, the market was valued at USD 73.06 billion in 2024 and is projected to reach USD 80 billion by 2035, with a compound annual growth rate (CAGR) of 0.828%. Another analysis by Market Research Future forecasts a more aggressive CAGR of 4.14% from 2025 to 2033, driven by urbanization and large-scale infrastructure projects. Key growth factors include investments in green steel technologies, such as electric arc furnaces and direct reduced iron (DRI), to align with global decarbonization goals.

The long steel segment, valued at USD 43.77 billion in 2024, remains the largest contributor to the market, while the flat steel segment is expected to grow to USD 31.77 billion by 2035, Market Research Future projects. Major players like Gerdau, ArcelorMittal, and CSN are also ramping up production capacities, but Ternium's acquisition of Usiminas could solidify its position as a regional leader.

Ternium's Financial Position and Strategic Rationale

Ternium's financial performance, however, reveals a mixed picture. As of September 30, 2025, the company reported a net profit margin of 3.72%, according to MacroTrends, with a market capitalization of $7.209 billion and total revenue of $17.649 billion. Despite a $405 million non-cash charge related to a deferred tax asset write-down at Usiminas in Q3 2025, reported by Investing.com, Ternium's Adjusted EBITDA increased by 4% to $420 million, reflecting operational resilience.

The acquisition of Usiminas is expected to enhance Ternium's cost efficiencies and market share, particularly in Brazil's long steel segment, where Usiminas is a key player. However, the lack of granular Brazil-specific financial data for Ternium's operations from 2018 to 2025 remains a challenge for investors. While the company's global metrics suggest stability, regional performance nuances-such as raw material costs, labor dynamics, and regulatory risks-are not fully disclosed.

Investment Implications: Opportunities and Risks

The acquisition aligns with Brazil's push for domestic steel production, supported by policies like import quotas and higher tariffs on foreign steel products, as noted by Market Research Future. This creates a favorable environment for Ternium to leverage its expanded control in Usiminas to capture market share. However, investors must weigh several risks:
1. Regulatory Hurdles: The antitrust approval process could delay the transaction, affecting short-term strategic plans.
2. Market Volatility: Ternium's Q1 2025 earnings preview indicates a projected 18.4% revenue decline to $3.901 billion, according to a TradingView preview, signaling potential macroeconomic headwinds.
3. Sustainability Costs: While green steel investments are a growth driver, they require significant capital outlays, which could strain Ternium's cash reserves.

Conclusion: A Calculated Bet on Brazil's Steel Future

Ternium's acquisition of Usiminas represents a calculated bet on Brazil's steel sector, leveraging its existing infrastructure and strategic partnerships. The move positions the company to capitalize on infrastructure-driven demand and sustainability trends, but investors must remain cautious about regulatory uncertainties and macroeconomic volatility. As Brazil's steel market evolves, Ternium's ability to integrate Usiminas effectively and navigate industry challenges will be critical to unlocking long-term value.