Good day, ladies and gentlemen. Welcome to the Ternium’s Second Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference is being recorded. I would like to introduce to your host of today’s conference, Mr. Sebastián Marti. Sir, you may begin. Sebastián Marti: Good morning, and thank you for joining us today. My name is Sebastián Marti and I’m Ternium’s Investor Relations, Director. Ternium issued a press release yesterday, detailing its results for the second quarter, 2014. This call is complementary to that presentation. Joining me today are, Mr. Daniel Novegil, Ternium’s CEO; and Mr. Pablo Brizzio, the company’s CFO, who will discuss our performance. At the conclusion of our prepared remarks, we will open up the call to your questions. Before we begin, I would like to remind you that this conference call contains forward-looking information, and that actual results may vary from those expressed or implied. Factors that could affect results are contained in our filings with the Securities and Exchange Commission and in our press release issued yesterday. With that, I’ll turn the call over to, Mr. Novegil.

Hello to everybody. It is my pleasure to participate in this Ternium conference call. I apologize because I’m on transit so that may be I will not be able to stay with you the whole conference. In any event, I will try to do my best in order to stay online as much as possible. So that given the schedule that we have today, let we make some initial remarks and some comments to start the conference call. As you remember when we did the outlook for the second quarter when commending the Ternium results after the first quarter of 2014, we had stated in summary, that we had expected a good demand in Mexico if steel prices in North America retain attractive levels throughout the second quarter. Shipments in southern regions in the first quarter were low because of seasonal effect, but it would recover in second quarter which did not happen as I will explain afterwards. And at the end, we said that we would expect a slightly lower operating income in the second quarter 2014. As you already know, because you did receive some – all the information that is issued in our press release, we had some deviations in the second quarter with respect to the second quarter that we expected before, and the reason of the main deviations were; First, weaker than expected domestic demand in Argentina that did not recover in the second quarter with respect to the first quarter. Second, longer than scheduled that means extraordinary maintenance of Minatitlán[ph] in Mexico, due to PLC complications that extended the idle period for the reparation and for the maintenance. Third, higher than expected costs, again driven by a stoppage for maintenance in Mexican facility, and some other factors that afterwards Pablo Brizzio will enter into…

Thanks, Daniel, and good morning to everyone. As usual, I will describe our performance in the quarter and expand on some comments that already Daniel made during his initial remarks. EBITDA in the second quarter 2014 was $330 million, 21% lower than EBITDA in the first quarter, 2014, as a result of lower EBITDA per ton partially offset by a 22,000 tons increase in steel shipments. EBITDA in the second quarter of the year was lower than we expected during our last conference call, as Daniel mentioned. But then, with the maintenance sequential decrease of EBITDA mainly as a result of lower margins due to higher cost of raw materials in Argentina and purchase flats in Mexico, partially offset by higher shipments in Argentina following a seasonally lower first quarter of the year. EBITDA, up being sequentially lower as anticipated but the decrease was stronger than we expected. The main two reasons – the main two factors that differ from our estimations, among other reasons, were related to the recovery in shipments to Argentina and the Argentina peso effects. We already mentioned that shipments in Argentina during the second half of 2014 would be affected by surrounded in macroeconomic environment in the country. We believe that the second quarter of the year would be only partially affected, and that we would see some pick up in shipments in the second quarter after the seasonal decrease in the first one. This will happen as second quarter shipments in Argentina market were similar to shipments in the first quarter, with a consequent impact in the second quarter EBITDA. We also started to see second quarter 2014, a further devaluation of the Argentine peso to various dollar exchange rate, after sequential devaluation of 8%, 13% and 23% in the third quarter, 2013 for…

Certainly. [Operator Instructions]. And our first question comes from the line of Carlos De Alba of Morgan Stanley. Your line is now open. Carlos de Alba – Morgan Stanley: Good morning, gentlemen. Thank you very much. First question is it possible Pablo, perhaps to quantify the impact of the longer than expected maintenance in Mexico? And also the impact of the higher purchases lab volumes that you had to acquire to compensate for these longer than expected maintenance? And second, I don’t know if Daniel or Pablo can comment on what expectations are for working capital going forward? I mean the company has always been quite good in keeping low working capital level. So we were surprised negatively what we saw in the quarter, but if you can comment about what is outlook for the whole year that would be good. Thank you.

Okay, Carlos, let me start by your first question, the impact – First of all, we have plant maintenance of different equipment in Mexico, and the issue was that we have a little longer than expected and in some case when we were in the process of putting back in place these facilities we have some issues that’s already Daniel mentioned. We are calculating that the amount of these deviations from what we were expecting was a number of between $5 million to $10 million for the quarter. In relationship to class as usual, we have a delay in due to first in first out we have delay on when we see the impact of this last purchase and the impact of this last consumed in our proxy. So, the difference is that during the first quarter when we were flat that we purchased as average cost of around $560 per ton during the second quarter where it’s that the purchase comprised of around $580 per ton. So there you have the difference that we were impacting our results. Of course, as we already mentioned, these were increases that were already expected when we get a view of our outlook during the first quarter. Regarding the working capital issue as you mentioned, let me clarify a couple of them that make us very positive in the regards in the coming quarter. First of all, we have an increase in our Argentine operation of iron ore due to the issues that this is the time of the year where you can utilize the most the river where the needs to go and there are other parts of the year where the wire cannot move through the river. So we need to accumulate higher level of inventories of iron ore during this quarter. So this is that issue of course we will not be repeating in the coming quarter. We are reducing inventories in Mexico and we are expecting to continue decrease coming from paid inventories in the first quarter due to commercial resources in our flat purchases in our operations in Mexico. Also, due to these higher purchases of iron ore and slab of course payments of these took place during the quarter and increased the level of capital utilization in working capital. So most of these issues seems that will change in the near future and as already as Daniel mentioned we are expecting to see a positive reduction in the coming quarters in relationships, not only to working capital, but also it will reflect in our net debt that with reviews in the coming quarters also having the reverse effects as we have already mentioned.

Let me mention also or let me add that you know Carlos we do follow very tightly the working capital. So we had a good room for improvement. Net debt went up mainly because non-recurrent reasons for example that payment of dividends the taxation issue the investment in pension and the CapEx program. But no doubt that regarding inventories we are going to be putting stress, putting emphasis and we will have room for a good improvement in the quarters to come, especially in the third quarter. Carlos De Alba – Morgan Stanley: Thank you very much.

Thank you, Carlos.

Thank you. Our next question comes from the line of Renato Antunes of Brasil Plural. Your line is now open. Renato Antunes – Brasil Plural: Good morning, everyone. Thanks for the question. The first one on Argentina, if you could talk about a bit about steel prices. We saw prices up taking this quarter we had seen a drop in the first quarter. I mean how do you guys believe this is going to behave looking forward because we actually believe that prices will be US dollar base for real? And the second question on CapEx, if you could just share your views on how do you see CapEx trending in the next year I think the budget for this year seems clear, but if you could even if speaking what we should we expect as we move forward towards 2015 and onwards? That’s it. Thanks.

Yes, Daniel?

Now, Pablo will share some numbers, but let me comment on a general basis that in Argentina as you know the domestic prices follow the international system. So the price in Argentina the products we are following the international trends and coming into our mind the domestic prices of the U.S., Mexico and Brazil. So all in all, we do not expect important changes in prices and if your comment goes in the direction of some currency fluctuation in Argentina, we had some of this situation in the past, but always we were able to recover in a short period of time at the previous level. So, we do not expect right now any important changes in the prices system in Argentina on the one hand. And on the second hand, also we can affect in 2014 and we’ll have some level of reduction in the CapEx of the company comparison with the last two years so maybe you can quote in more detail Pablo.

Yes Daniel no worries I’ll comment in your answer to pricing but in respect to CapEx as I already mentioned we have invested $240 million during the first half of the year, and these should follow and continue to be the trend for the coming semester. And as again mentioned, we are not planning at the moment to increase any further in the coming years the capital still we decide to analyze where any expansions or any move from the company. So up to now, we are seeing now this is the level of CapEx we see in the coming future. Renato Antunes – Brasil Plural: Thanks.

You’re welcome.

Thank you. And our next question comes from the line of Marcelo Aguiar with Goldman Sachs. Your line is now open. Marcelo Aguiar – Goldman Sachs: Hi guys. Thank you for the opportunity. My questions will be more related to the demand trends more interested on the demand first on the demand trends in Argentina. How you’re seeing the industry evolving regardless any let’s say positive outcome what is going to happen today or tomorrow regardless of the debt or negotiations? So, how do you see demand evolving in the margin to be continued to have an extended recession in the industry, and that won’t impact your results? And then the same would like to understand for Mexico, I mean are you seeing like an extended high elasticity demand IP to GDP in Mexico I mean should we start to see the demand two three times IP? So that will be on the demand side. And now on the more general question, I mean you guys I mean Ternium has been quite stable in terms of let’s say the EBITDA per ton and around $178 level. So, given the whole depreciation impact may be the new outlook for Argentina domestic demand, are we going to get back on this 140 150 level, or how do you see evolving EBITDA per ton on a consolidated basis going forward, having my mind that may be Argentina could be weaker for a little while? Those are my questions. Thank you.

Alright. Let me comment first on the North American market, as I mentioned in my remarks, the domestic market in Mexico, the total consumption of steel and steel consumption is doing well is better than expected. We expect now, an increase in steel consumption in 2014 of 4% or 4.5% upper in steel consumption up in comparison with 2013. Also, we are looking at the U.S. market that this also doing better than expected. As I mentioned, we were updating work in association forecast and in comparison with the one that we have done in April 2014 and we found out the U.S. market as well and the Mexican market are doing a little bit better or better than we have seen before. So the demand in Mexico and the U.S. is strong. I see inventory level in service centers is low. Our concern is on the side of the imports coming into the U.S. market, but up to now the market is strong and able to absorb the local supply and above that also a record kind of import. Also, as you know we are doing very well in the building in the startup of our Tenigal plant as well as our PL-TCM plant in Pesquería, Monterrey. So that we expect we will be on the top of the market performance. We are going to be gaining some market share especially in high-end products, in the automotive industry as well as the home appliance industry. Regarding the Argentine market, we see that the market is doing differently by sectors for example, the automotive industry is not doing well it has been impacted also by a decreasing consumption of automotives in Brazil home appliances are doing also weaker but on top of that we see the construction doing well, and also the energy related projects and investments doing very well. Also the agro is doing very well in Argentina. So all in all, the mining in Argentina when it is below our expectations at the beginning of the year, it’s not that bad I mean it’s doing relatively well, and we don’t see important changes right now with respect to the second quarter. Regarding – it is also it is very difficult not to comment on the holdout issue when making this comments on Argentina that as I said in my remarks, we have to wait the negotiations that were –- our steel in place and we expect as I said before a positive solution now to this situation, especially taken into consideration that the Argentine government is sending signals that wants to restructure and wants to do another debt. Regarding the margins and operating income per ton so may be Pablo you can enter into more detail.

Of course. Marcelo as you know yes we have $140 per ton EBITDA during the second quarter we used them up. As I mentioned before full semester we reached a level of 160 which is basically in line with the levels we have increased this year from previous quarter. We also mentioned that we are expecting a recovery in these margins coming to the third quarter. So the steel to sustain a very good level of EBITDA margin throughout the year. We have during this quarter a decrease compared to the first quarter, but all in all, put in the first semester together the number was basically in line with what we used to have in the previous semesters. Marcelo Aguiar – Goldman Sachs: I’m sorry. So just to be clear on the Argentine demand, so you guys are not seeing weaker demand in the third quarter versus the second let’s take in consideration what’s happened in July so far?

Yes that’s what Daniel was trying to say we are not expecting to see a further increase up to now taking into consideration of what we know up to now the level of achievements what we saw in the second quarter. And you know that we already mentioned that the level in the second quarter was below our expectations and in line with the seasonally low level of the first quarter but all in all we are expecting –

Yes, because up to now we do see a similar level of activity. It is difficult to forecast as I said before there is a good volatility a good different situation among the different sectors automotive industry is doing badly also home appliance is weaker than expected but I the agro business is doing very well the construction business is doing very well and energy related projects are doing very well. So all in all we do not have yet reasons to feel that the market will feel would be different to the one that we have in the second quarter. Marcelo Aguiar – Goldman Sachs: Thank you very much gentlemen.

Thank you. And our next question comes from the line of Alex Hacking of Citi Bank. Your line is now open. Alexander Hacking – Citi: Thank you for the question and the call. I just have one question Daniel mentioned earlier, an increase in anti-dumping investigations against Chinese steels in various countries. Can you remind us if there are any kind of cases that are under investigation or pending which are potentially relevant or material for Ternium, either in I guess the U.S. or Mexico or Brazil? Thank you.

Daniel?

Yes, hello?

Yes. Did you hear the question?

I was out of line for couple of seconds, but if I understood properly the question is in relationship with my comment on anti-dumping cases. So I don’t have anything more to quote because as you know I cannot open into retails in the things and in the matters related with dumping that we are analyzing and were not presented yet or under the authorities. So I would prefer not to mention any specific rate cases. But there are no more cases in Argentina no doubt. There are some concerns in Mexico that we are addressing properly and we are studying in detail analyzing the opportunities analyzing the facts, and analyzing the damage into the marketplace and the dumping situations. Alexander Hacking – Citi: Okay. It’s clear. Thank you.

Thank you. And our next question comes from the line of Thiago Lofiego of Merrill Lynch. Your line is now open. Thiago Lofiego – Merrill Lynch: Hi. Two questions, are you still evaluating the possibility of buying an additional stake in Usiminas given, needs to sell it or is this totally out of the picture for you guys? And the second question, if you could comment on demand growth expectations toward the Mexican market, and if you could comment on the auto markets and other subsectors for the next couple of years that would be great.

Okay Daniel, if you’ll allow me let me take the first half of the question. As we have already mentioned Thiago this is the current question throughout the quarter we have nothing to add to that. And we have already commented on which is our expectation with measures to shares of Usiminas, so we have nothing to add to that. In relationship to sectors in Mexico, Daniel as you know if you want to comment or let me go ahead with it?

Yeah, go ahead.

Okay. We tend to divide the Mexican markets into two different sectors, industrial sector and the commercial sector which is more related to the construction sector. In the first one, in the industrial sector which is mainly lead by the auto sector and the home appliances one, they are really – they are doing relatively well and sectors that are driven the demand up in Mexico. And especially as you know, these sectors are mainly dedicated to export back to the U.S. and kind of to the rest of the world. So these sectors are doing pretty well. Because commercial sector which was not doing well throughout the last years are still not doing extremely well, but we are excited to see some signs of recovery in these sector especially coming from some infrastructure program announced by the government. So we are positive that in the future this sector would also pick up and we are incentive for demand in the coming quarter. So all in all, the expansion the Mexican consumption is doing pretty well country is seeing a higher number on steel consumption, and up to now, driven by the industrial sector while we are expecting to see some recovery also in the commercial one. Thiago Lofiego – Merrill Lynch: Okay. Perfect. Thank you.

You’re welcome.

Thank you. And our…

Gentlemen, I apologize, but I do as I said in the beginning, I do have to take a plane so I will be out of the conference now. I will try to connect when traveling by car through my cellular phone, but I’m not sure if I will be able. So, I wish you a very nice rest of the week and I hope to see you soon. Thanks a lot.

Thanks, Daniel.

Thank you. And our next question comes from the line of Leonardo Correa of BTG Pactual. Your line is now open. Leonardo Correa – BTG Pactual: Yes, hello. Good morning everyone. So my first question is regarding the ramp up of projects in Mexico. I understand previously I mean there was quite limited visibility on your overall impacts. But Pablo, just now after several months into the ramp up, I mean if you can help us understand may be overall impact on EBITDA per ton, if you have those numbers I mean I think that would be very helpful. What type of level you think those party have contributed in terms of EBITDA per ton? And also may be a second question, and I understand that during the call you mentioned that CapEx should trend lower, and that there is still nothing regarding new phase of expansion. But if you can, just thinking bigger picture, what would be potentially the next phase given that Ternium doesn’t really have a history of increasing the dividend more significantly. Just if you can help us out to understand what the next phase, next wave of investments? Where those could potentially be? Will there be flats or potentially moving back to M&A so just wanted to understand those may be bigger picture themes. Thank you very much.

Okay Leonardo let me start by that. We discussed the level of CapEx expected for this year to be around the levels that we are seeing during the first semester, moving to second semester. We have an additional plant that is really in place, I think in the plant that we have which is the power plant in Mexico that is undergoing the moment and is expected to finish in 2016. This is the last plant that we announced and also as was commented in the press in Mexico, we are having a rally feast of second place of our galvanized lines expansion in Mexico, the one that we have in Tenigal together with Nippon Steel, we have under analyzes further expansion of these lines to double capacity in order to keep supplying the increasing Mexican auto market. So this is the one that we have as you know as we already said that, this will take around a month to finalize the analysis and take a decision over that. So besides that, to developments we don’t have at the moment any further plans to mention, but as you mentioned also we are always open and we are always analyzing the rest strategy for our company to continue and we never roll out anything. We continue analyzing which is the best possibility that the company has. In relationship to your question on the expansion in Mexico, we are still going through a ramp up period and as we have already mentioned, we are online with that. We are expecting to be by year end, at full capacity at these facilities, but not in the case of Tenigal 100% case to the auto industry until the beginning of next year. So we are moving to the direction and working well in fulfilling these goals. In relationship to the margins that we generate, we already in the past and we are still under the same scenario and trying to compare with what we said which is that though, these new tonnage will come from a non-integrated facility which as you know, has lower margin that the private facility, we contribute to sustain the level of EBITDA per ton, EBITDA margin as company at the moment. This is the plan that we sell and we are working on fulfilling these as we have been commenting from the very beginning. We need to finalize this process, this contract. It will end at the beginning of this year when we will have the facility mainly dedicated to the auto industry which is not the case at the moment and the ramp up process will finish and we will see the final result on that. So we need to wait a little bit to see these being through the numbers of the company. Leonardo Correa – BTG Pactual: Thank you very much, Pablo.

You’re welcome.

Thank you. And our next question comes from the line of Marcos Assumpção from Itaú. Your line is now open. Marcos Assumpção – Itaú: Hi. Good morning, everyone. My first question is regarding the slab you mentioned that in the second quarter results were a little bit pressured by higher slab prices. What is your expectation for those slab prices in the second half of the year? How you’re seeing this spread between each your prices? In the second question, regarding our competition with the Chinese exports, are you seeing the increase in Chinese exports impacting your markets? Is this having a native impact on prices in Latin America regions where you operate from Columbia?

Okay, Marcos. How are you? Let me go ahead first on the last question. We are still expecting to see some further increases in the slab cost that we will see in the third quarter compared to the second. We are expecting to see an additional between $10 to $15 of additional cost slab that it is really including our expectations for the quarter and these will be reduced by all other things that we are not expecting to suffer at the end of the third quarter like the maintenance issue and other things, like for example, when we have this facility right on track, we will produce more and the facilities and utilize land first class. But the – and this is of course well known that the cost of slabs during the first quarter were higher than they were the fourth quarter of last year. And these are the prices of slabs that we see come in here to our cost in the third quarter. Your second question was? Sorry, the competition of Chinese the imports into our markets. We are not seeing Chinese imports or import coming from China having a significant increase or an important nor in our Mexican market or in the U.S. as well as in some of the other countries in Latin America. Though you are right, that in some of the countries the impact of the Mexican imports are being important – Chinese importer are really important like Central America which is suffering a lot of imports, though the market is small, we are seeing some there. But in our main markets we have not up to now seen some pressure from Chinese imports. You need to take into consideration also for example, in the Mexican markets, significant portion of the total consumption of the market. Marcos Assumpção – Itaú: All right. If I may, can I have a third question here on the prices in the U.S.

Yes. Marcos Assumpção – Itaú: We’re seeing good level of prices in the recent quarters. On the other hand, prices elsewhere in the world mainly China they’re still depressed. Do you see this gap between the prices in the U.S. and in China sustainable for the coming quarters?

Well, this is as usual is very difficult question to answer, but we are seeing and we are believing is that at least this situation was sustained during the third quarter, due to different reasons. And they want consolidation of recovery of the Mexican specifically the U.S. market, some control on the production levels. So we are seeing this we think at least in the third quarter. When I think as you mentioned the gap between the slabs and the steel sustained at a very healthy level for the company. Marcos Assumpção – Itaú: Okay. Perfect. Thank you very much.

You’re welcome.

Thank you. And at this time, I’m showing no further participants in the queue. I’d like to turn the call back over to Pablo Brizzio for any closing remarks.

Okay. Thank you. As usual, thank you very much for your interest and for your time today. And we continue to look forward to remain in touch with you and as usual, please contact us if you have any further questions. Thank you very much for the call. Good bye.

Ladies and gentlemen, thank you for your participation on today’s conference. This concludes the program. You may now disconnect. Everyone have a great day.