FOTO. Surfing the Mexican Expansion at a Discounted Valuation. Play the Mexican story at a discounted valuation

Equity Research Ternium (TX) COMPANY UPDATE Ivano Westin 55 11 3701.6318 ivano.westin@credit-suisse.com Ternium (TX) February 17, 2014 Research Analysts Ivano Westin 55 11 3701.6318 ivano.westin@credit-suisse.com Marina Melemendjian 55 11 3701.6341 marina.melemendjian@credit-suisse.com Santiago Perez Teuffer 52 55 5283.8901 santiago.perezteuffer@credit-suisse.com FOTO Play the Mexican story at a discounted valuation Surfing the Mexican Expansion at a Discounted Valuation We reiterate our OUTPERFORM rating on Ternium (TX), which continues to stand out in terms of valuation and is trading at 4.4x Ev/Ebitda 2014, a 40% discount to global peers. Our DCF-based TP of US$38/share (raised from US$28.80/share) yields a potential upside of 23% and is based on conservative expansion assumptions and a higher country-risk premium for Argentina, which gives us confidence that TX remains an attractive investment case, especially as the company is closer to the end of the capex cycle and earnings growth in 2014-16 will be largely driven by initiatives under management control. More attractive than global peers We believe investors are not likely to find in the global steel market a stock with such a discount to peers and uphill earnings trend, double-digit FCF yield (10% in 2014 and 12% in 2015) and ROE (9% in 2014 and 11% in 2015), low leverage of CSe 0.9x net/debt Ebitda 2014, and a normalized Ebitda margin of 19%. TX is an appealing story, with a robust track record, outstanding management, integrated operations, well-positioned in LatAm markets and with over 50% of revenues driven by North American markets. Attractive on a stand alone and on a relative basis Although our strategists rate Mexico as U/W in a LatAm portfolio as Mexico s appears to be trading at a forward P/E of 18.5x, certain investors see Mexico better suited than other LatAm markets to the current external scenario, owing to its lower external financing requirements and more leverage to US growth. On the opposite direction of Mexbol, TX remains one of the most attractive names on a valuation basis, and its earnings growth in 2014 and 2015 is likely to be an outlier compared to other Mexican stories. Buy Ternium. Marina Melemendjian Santiago Perez Teuffer 55 11 3701.6341 52 55 5283.8901 marina.melemendjian@credit-suisse.com santiago.perezteuffer@credit-suisse.com DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON-US ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON-US ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION Client Driven Solutions, Insights, and Access

Executive Summary Ternium is one of the leading steel producers in LatAm and one of the most profitable in the globe, having reported stable Ebida/t in the vicinity of US$140-150/t in the last two years (vs. double digit global average) and is on a clear upward earnings momentum (CS estimates Ebitda/t growth of ~18% until 2015). Its main operations are in (i) Mexico (Tenigal/Pesqueria and former Hylsa/Imsa), where its flat steel products are sold mainly to the automotive, construction, and industrial sectors and (ii) the Southern Region, where its Argentina-based Siderar plant allows TX to maintain a ~90% market share in the country, focusing on the construction, agriculture, packaging, and tube sectors and other markets, of which the most significant are Colombia, USA, and Central America. The company manufactures a wide range of products (from semi-finished steel, flat-rolled and long products to welded tubes and beams) and the company s integrated multi-regional business model and distribution centers enables it to capture significant synergies, providing it with a competitive advantage in the main markets in North, Central and South America. The company is on track to deliver a 20% volume growth mainly driven by its Mexico-based operations, which account for ~50% of the company s top line. As a result of the company s operational expansions, lower risk perception in Argentina and earnings momentum, we do expect a re-rating of the stock and its valuation to global peers to narrow. We provide below our reasons to be constructive on the name. FCFE Yield Evolution (%) 14% 12% 10% 2% 2013 2014 2015 2016 Source: Credit Suisse analysis Steel Ebitda/ton (US$) 176 185 162 151 2013 2014 2015 2016 Source: Credit Suisse analysis TX US Food For Thought THOUGHT #1 Where to find more attractive numbers on the materials space? The stock is trading at a 40% discount to global peers (2014 Ev/Ebitda basis), in-line historical levels of 40% with TX is on a clear upward earnings momentum. CS estimates annual Ebitda increasing at doubledigit rates for the next three years, normalized Ebitda margin of 19% vs. 12% global average, FCF yield of 10% in 2014 and 12% in 2015. Additionally, its leverage level is one of the best in the global steel market, at 0.9x net/debt Ebitda 2014 and is the end of the capex cycle. THOUGHT #2 Argentina: The stock already prices in a bear scenario. Attempts to slash TX s steel market share and pricing power in Argentina have failed in the past, as global steel makers struggled to enter the market. Despite investors concerns of a depreciated ARS, revenues of TX s Siderar in Argentina are in pesos, but invoices are denominated in USD, which is a natural hedge for an adverse FX scenario. Recall Argentina 10y CDS increased 36% from Jan/13 to Jan/14, while TX s Ebitda/t increased 9% in the period (CSe). THOUGHT #3 Play Mexico s fast-growing story at low risk/multiples. TX is at the end of its capex cycle and is on track to deliver a 20% consolidated growth in steel sales volumes, of which 75% will come from Mexico, where TX s domestic products will easily replace imports, which represent 35% of consumption, given the low production base in the country. Margin improvements are fairly achievable as costs shall remain under control given integrated production base. THOUGHT #4 We prefer TX vs. Mexbol. From our recent discussions with investors, most tell us they remain concerned about expensive valuations in Mexico (we estimate Mexbol to be trading at a forward P/E of 18.5x), nonetheless, many remain with a more constructive view on Mexico vs. Brazil and other LatAm names. TX remains a Mexican story and is trading at discounted valuation to most Mexican names and to global peers. Source: Company data, Credit Suisse estimates, Bloomberg 2

Ternium Business Overview Ternium is a leading producer of flat and long steel in LatAm. Its operations are divided into three regions and a mining segment, which is mainly a way to ensure self-sufficiency of raw materials to its steel operations aiming at cogs reduction. The structure is as follows: Sales Contribution (US$ bn) 0.2 0.4 0.3 0.3 0.2 Mining Steel Division (i) Mexico, (ii) Southern Region, and (iii) Other Markets, which we estimate to account for 52%, 33% and 15% of 2014 top line, respectively. 8.6 8.5 9.1 9.8 10.5 Steel Mining Division Mexico-based operations, with a production capacity of 4.4 Mtpy (Ternium owns 100% of Las Encinas mine, which has 2.1 mt production capacity, and has a 50% equity stake in Pena Colorada, which has production capacity of 2.3 Mt). -0.2-0.3-0.3-0.3-0.3 2012 2013 2014 2015 2016 Others Highlights of Ternium s Steel Operational Divisions Division Crude Steel Capacity Strengths Risks Steel Sales Contribution (%) Mexico 7.3 Mtpy Focus on high end products for the Automotive Industry 11 distribution centers to reduce logistics costs and meet demand Increase in scrap price (raw material) Slab shortage, COGS fluctuation subject to market price 52% 57% 52% 52% 53% 53% 53% Mexico Southern Region 2.8 Mtpy Largest Steel Producer in Argentina, captive market share (~90%) Vertically integrated operation Increase in Taxes (Argentina) GDP slowdown, political intervention 32% 30% 33% 34% 34% 34% 34% Southern Region Other Markets 0.8 Mtpy Geographical diversification: United States, Colombia and Central America International competition 16% 13% 15% 14% 13% 13% 13% 2012 2013 2014 2015 2016 2017 2018 Other Markets *Accounts for Ternium s stake in Pena Colorada. Source: Company data, Credit Suisse estimates 3

Ternium Business Overview - Steel Ternium s steel business is divided into three different Regions: Mexico: The most important division, it represents 52% of the company s net revenues from steel in 2014 (CSe) and produces both flat- and long-steel products, selling (i) noncoated steel products to construction companies; industrial customers in the packaging, electric motors and service center industries; distributors; and auto parts manufacturers, (ii) coated products to construction, manufacturing and auto parts clients, and (iii) rebar, wire rod and tubular products to independent distributors. Southern Region: Ternium has nine steel production and/or processing units in this region, located in Argentina, consisting of one integrated flat-steel making plant, four downstream flat-steel processing plants, comprising cold-rolling, coating or tube making facilities (three of which include steel service centers), and four steel service centers. A significant portion of its sales in Argentina is made through its subsidiary Siderar, although the region also includes sales to Bolivia, Chile, Paraguay, and Uruguay. Clients are in the agriculture, packaging, automotive, capital goods and tube sectors and products are sold to a independent costumer base consisting of small-sized companies and distributors. Other Markets: We estimate it will represent 15% of 2014 steel sales, and allows TX to be exposed to the recovering US market. Construction and energy industries are natural clients, especially in the Gulf and West Cost. The other relevant niche market is Colombia, in addition to exports to a number of countries in Europe and Asia. Steel Sales Contribution (in Mt) 2012 Steel Sales Breakdown per Market 9.1 1.5 2.6 9.6 1.4 2.7 10.0 1.4 2.9 10.5 10.5 10.5 1.4 1.4 1.4 3.0 3.0 3.0 Other Markets Southern Region Tubes and Profiles 1% Semi Finished Long Steel 7% 12% 32% Tinplate 2% Semi Finished 5% Hot Rolling 5.0 5.5 5.7 6.1 6.1 6.1 Mexico 25% 16% Galvanized Cold Rolling 2013E 2014E 2015E 2016E 2017E 2018E Source: Company data, Credit Suisse estimates 4

Mexican Steel Division a Closer Look The Mexican division accounts for 52% of the company s steel net revenues. (2014 CSe). One of the main competitive advantages are its 11 distribution centers located in the country, which allows it to maintain a significant market share and to reduce logistics costs. Ternium focuses on the high-end market, especially in the auto industry, as (i) most products in this market are currently imported by the country and (ii) Mexico is the fastest-growing auto market in LatAm (9% CAGR 2010-2016e). Mexican Division, Current Production and Distribution Plants Mexican Division - Growth and Competition Despite the domestic competition with local players (including AHMSA, Deacero and ArcelorMittal), TX is well positioned to deliver net growth of 1Mt in finished steel (~10%), capturing market share mainly by replacing imports. Project Pesqueria Facilty (Cold-rolling mill) Tenigal Facility (Hot-dipped galvanizing) Capacity 1,500Ktpy 400Ktpy Start-Up* *According to company data, we estimate a gradual ramp in 2014-16, net volume growth of 1Mt. 2H13 1H14 Ternium Moncloca: produces Flat steel products Ternium Guerrero: produces Flat and Long steel products Ternium Norte: produces Long steel products Ternium Juventud: produces Flat steel products Ternium Churubusco: produces Flat steel products Ternium Universidad: produces Flat steel products Ternium Apodaca: produces Flat steel products Ternium Varco-Pruden: produces Flat steel products Mexican Division, Steel Capacity (Mtpy) Steel Product Slabs Billets Crude Steel Capacity 2.3mt 1.6mt 4.0mt Ternium has 11 steel plants in Mexico (3 fully integrated) and a total installed capacity of 7.3mt of finished steel products in the country. Ternium San Luis: produces Long steel products Ternium Puebla: produces Long steel products HRC Rebar&Wire Hot Rolled CRC Galvanized Pre-painted Service center 6.0mt 1.1mt 7.1mt 2.5mt 1.4mt 0.7mt 3.8mt Source: Company data, Credit Suisse estimates 5

Southern Region Steel Division Siderar: A Niche Market The Southern Region segment consists mainly of Ternium s subsidiary in Argentina, Siderar (60.9% controlled by TX Luxembourg), which after a period of stoppages in its blast furnace #2 and expansion capex, is on track to deliver volume growth of 0.5mt of semi-finished products (slabs) to fulfill TX needs and supply the local market, where TX has a niche market, reaching ~90% of local demand. Current installed capacity in Argentina is 2.8Mtpy of hot rolled products, which is expected to increase after the startup of the new continuous caster line (it should increase slab production capacity by 500ktpy). Ternium has nine steel production and/or processing units in the Southern Region, all of them located in Argentina. They consist of (i) one integrated flat-steel making plant, (ii) four downstream flat-steel processing plants, which include cold-rolling, coating or tube making facilities, and (iii) four steel service centers. Clients are small and medium-sized companies and distributors and the automotive industry. Steel Prices Prices in the Southern Region are mainly set after negotiations with the local customer base but, in general, they follow the price trend of international markets. The chart below shows the historical average net revenue/t in the region compared with HRC FOB China prices. The chart shows the correlation between both. 670 1131 695 1116 645 1085 1122 574 1157 637 1131 619 HRC FOB China Steel Net Revenues/ton 1120 566 1113 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 582 Argentina, Steel Capacity (Mtpy) Steel Sales Volume (in Mt) & Net Revenues (in US$mn) Steel Product Slabs Capacity 2.9mt The Southern Region division accounts for 30% (2013 Cse) of the company s net revenues from steel and we estimate that this share should stabilize at 34% going forward Crude Steel 2.9mt Southern Region Volumes Southern Region Net Revenues HRC Hot Rolled CRC Tinplated Galvanized 2.8mt 2.8mt 1.8mt 0.2mt 0.7mt 2.6 2.7 2.9 3.0 3.0 3.0 2,737 2,229 3,069 3,370 3,587 3,703 3,822 Pre-painted 0.1mt Service center 1.8mt 2013E 2014E 2015E 2016E 2017E 2018E 2012 2013 2014 2015 2016 2017 2018 Source: Company data, Credit Suisse estimates 6

Sources Uses February 2014 Mining Division Ternium is a steel maker and is unlikely to monetize its iron ore assets, the main objective of having a mining business is to be self-sufficient in raw materials and to control costs. Ternium s mining division is composed of two iron ore production facilities located in Mexico: Las Encinas, in which the company holds a 100% stake, and Consorcio Pena Colorada, which is 50% owned by Ternium and 50% by ArcelorMittal. Mining production is mainly consumed internally and the remaining volume is sold to third parties in the domestic market. Current combined installed capacity of both mines is 4.3Mt (considering only Ternium s attributable production), of which the company uses ~3.9Mt for its own consumption. TX s mining business is quite stable and unlikely to be impacted by any change in demand in the global market. The main concern for margins used to be possible changes in the tax regime in Mexico, which is now clear (7.5% on Ebitda) post the recent legislation change and is fully priced in TX s shares. TX currently buys ~3.0Mt in the Corumbá region mainly supplied by MMX, which recently announced that it is reviewing the strategy for Corumbá unit and is seeking business opportunities, as a result we expect current iron ore supply from MMX to be replaced by (i) new buyer of Corumbá operations, (ii) Vale, which produced 3.3Mt in the region during 9M13, or (iii) another local player. Las Encinas (100%) Composed of two crushing plants with 5.3Mtpy capacity, one concentration plant with 2.1Mtpy capacity, and one pelletizing line with 1.9Mtpy capacity. Current installed production capacity of Las Encinas is ~2.0Mtpy. Las Encinas produces iron ore pellets and magnetite concentrate, operates the Aquila open-pit mine, and intends to start operations at El Chilillo, a small open-pit mine that should last for 2-3 years until exhaustion, from 2013. Considering only the Aquila mine, Las Encinas s proven reserves are 28Mt, with 41% Fe content. The mine has been in operation since 1970 and based on 2012 production (1.9Mt with 65-66%Fe content), its estimated mine life is seven years (including 2013). Pena Colorada Mining Operations (50% TX, 50% AM) Considering Pena Colorada s total capacity, the production facility is composed of one crushing plant with 11Mtpy capacity, one concentration plant with 4.5Mtpy capacity, and two pelletizing lines with 4.1Mtpy capacity. Pena Colorada s current installed production capacity is ~4.6Mtpy (~2.9Mt attributable to Ternium). The concentration plant is located at the mine, while the pelletizing plant is near the seaport on the Pacific Coast, 50km away. The concentrate is sent as a pulp through a pipeline from the mine to the pelletizing plant in Manzanillo. Total proven and probable reserves at Pena Colorada mine amounts to 260Mt (~50% each), considering 24% Fe content. In operation since 1974 and considering 2012 total production (4.5Mt with 65-66% Fe content), mine estimated life is 18 years, from 2012 onwards. Iron Ore Sources & Uses (in Mt) Ternium Mining Ebitda (in US$mn) 95 Production in Mexico 4.3 3.9 Consumption in Mexico 45 46 2013 2014 2015 2016 38 Corumbá region - Brazil 3.0 Others regions - Brazil 1.0 0.4 4.0 Sales Consumption in Argentina Source: Company data, Credit Suisse estimates 7

Ternium New Projects Pesquería Facility Ternium s Pesquería project consists of the construction of a new cold rolling facility in Monterrey City, Mexico. Capacity of the new plant is expected to reach 1.5Mtpy and should expand the company s range of dimensional products. The facility started its operations in 2H13 and is expected to reach full capacity in 2015 (CSe 2016). The new mill is focused on high-end products, which bodes well for the company s strategy of trying to achieve higher levels of differentiation through an increased participation in these markets. The rationale behind this strategy is mainly supported by (i) the fact that this is a fast-growing segment in LatAm, which currently imports most of the products to meet demand in the region, and (ii) the higher margins of the segment as a result of products with more added value. Tenigal Plant Tenigal is a JV between Ternium and Nippon Steel & Sumitomo Metal Corporation, which hold stakes of 51% and 49%, respectively. Tenigal s project is composed of a hot-dip galvanizing plant in Monterrey City with production capacity of 400ktpy. The new facility should serve the Mexican automobile market, targeting new customers with high-grade and high-quality galvanized automotive steel sheets. The project is currently in ramp-up phase and should reach full capacity in 1H14 according to company estimates. We estimate additional sales volume coming from Pesqueria and Tenigal projects at 0.4Mt in 2014, 0.2Mt in 2015, and 0.1Mt in 2016. In addition, we assume a higher capacity utilization rate in 2016, increasing to 73% from 70% in previous years, adding 0.2Mt to Mexican steel sales volume. We assume stable stabilize sales volume in Mexico at 6.1Mt from 2016 onwards, compared to an installed capacity of 8.3Mtpy. There is clear room for further upside which are not in our base case. Mexico Division Estimated Steel Sales Volume (in Mt) Additional Sales Volume from New Projects Additional Sales Volume from higher capacity utilization 0.2 0.2 0.1 0.4 5.0 5.0 5.5 5.7 6.1 6.1 2013 2014 2015 2016 2017 2018 Source: Company data, Credit Suisse estimates 8

Ternium New Projects New Continuous Caster in Argentina In order to increase its slabs self sufficiency (annual shortage of ~2.8Mt), Ternium is increasing its steel production in Argentina by building a new continuous caster and a vacuum degassing station, which will result in an increase of 500kt in annual production capacity of slabs. The vacuum degassing started operations in 3Q13 and the continuous caster should start up in 1Q14. The production of ultra low carbon steel grades should result in a new product offering for the automotive and appliance industries. We estimate additional sales volume coming from the new continuous caster in Argentina to amount to 0.1Mt in 2014, 0.2Mt in 2015, and 0.1Mt in 2016. We assumed stable sales volume in Southern Region at 3.0Mt from 2016 onwards, compared to a nominal installed capacity of 3.3Mtpy. Techgen - Power Plant in Mexico In August 2013, Ternium announced a MOU with Tecpetrol International and Tenaris to jointly build and operate a natural gas-fired combined cycle electric power plant in Mexico. A new company, Techgen, was created to develop the project, 48% owned by Ternium, 30% by Tecpetrol, and 22% by Tenaris. Techgen s power capacity should reach 850-900MW, of which 78% will be purchased by Ternium and Tenaris and the remaining production, to third parties in Mexico. Total capex to develop the power plant is estimated at US$1bn, to be partially financed with debt. Operations will likely start up by the end of 2016. As the approval of the project is still subject to execution of definitive documentation and other conditions, we do not incorporate the power plant development in our model at this stage. Southern Region Division Estimated Steel Sales Volume (in Mt) Additional Sales Volume from New Project 0.2 0.1 48% 30% 22% Techgen 0.1 2.9 3.0 3.0 2.6 2.6 2.7 78% to be sold to Ternium and Tenaris 850-900 MW 22% to be sold to third parties 2013 2014 2015 2016 2017 2018 Source: Company data, Credit Suisse estimates 9

TKS & CSA: Not Now, But Still on the Plate. TX s Slab Shortage: M&A or Brownfield? While TX management has publicly stated it is out of the CSA bid and although TKS has focused on achieving breakeven at CSA in FY 2014-15 (post its reclassification as a continuing operation on September 30, 2013 and a 2mt/y slab supply agreement with Alabama effective until 2019 and operational improvements), our take is that CSA could be divested in the next 24 months and natural bidders continue to be CSN and Ternium. Our thesis on TX s interest is based on the following: (i) TX will remain a steel company in the long run (not fully like TKS, which previously stated that steel production would no longer be its core business), (ii) TX s strategy is to maintain costs under control, which is attained in the long run through captive raw material supply, (iii) slab is the raw material in which TX is least self-sufficient (2.8mt annual shortage), (iv) the industry is cyclical and while we are moving away from the bottom, assets remain at an attractive valuation (CSe distressed value, i.e., < US$2bn vs. replacement cost of ~ US$6.5bn), (v) synergies with Usiminas (noting that Usiminas has a surplus of rolling capacity but will have a shortage of slabs if demand picks up), and (vi) slab shortage in Brazil s domestic market (i.e., CSN currently purchasing ~600Kt of slabs per year). Slabs to TX s Mexican Operation What Does TKS say? Reasons (for Any Buyer) to Stay Away from the Asset Bottom Line The read-across for Ternium might not be as negative as suggested by the initial headline. Assuming a normalized operating rate of 80%, reflecting an annual production of 4Mt and slab supply of 2Mt by CSA to Alabama, the balance could be delivered to TX s Mexico-based operations. Of the ~2.8mt slabs required each year, about 1.2Mt is purchased from AM's Mexico-based asset Lazaro Cardenas and the balance from other local and seaborne suppliers. TX is expect to marginally increase intercompany slab supply (by 0.5Mt from Siderar to TX Mexico), but there will still be a shortage unless TX makes an M&A move or approves a brown/greenfield expansion. Source: Company data, Credit Suisse estimates TKS announced it found a sustainable solution for Steel Americas post (i) Alabama s US$1.55bn deal with AM/NSC&SMI and (ii) the slab supply agreement of 2Mt per year until 2019, which resulted in TKS reclassifying CSA from a discontinued operation into a continuing operation and recently admitting that it does not plan to sell CSA anymore. Management will focus on operating improvements at the Brazilian plant and is confident they will be able to continue the trend of halving the division s operating loss, which reached positive territory in the past quarter with EUR1mn Ebit, but amounted to a EUR372mn loss in the last 12 months. CSA adjusted negative Ebitda of EUR 17mn in 1QFY13-14, despite all market improvements. Required capex to improve operations could reach up to US$1bn (or ~US$0.5bn in a conservative scenario). For how long will slab market price remain above CSA s cash cost? Environmental liabilities/issues faced by CSA in Rio de Janeiro. In December 2010 dumping of hot metal resulted in graphite dust emissions and complaints by the government. Possible cancellation of fiscal benefits granted to Thyssen by the Rio de Janeiro state government in case of change in CSA s control. We expect no relevant news on CSA s divestment in the short term, but we believe Thyssen remains open for discussions about a potential CSA divestment, at the right time and price. This could be an overhang for TX in the mid term, but in our view Ternium is likely to acquire the asset (i) only at a distressed valuation, (ii) at the right time, (iii) without pressuring its balance sheet. 10

What are the potential risks for TX? Don t focus on the Argentinean Peso The slowdown of the Argentine economy is rather a more important risk to TX s investment case than the much discussed depreciation of the local currency itself we highlight below a number of risks to which the company is exposed that might not be on investor s radar screen. We conclude that while uncertainty could remain for some time, TX has historically managed risks better than most of its global competitors, and we remain confident in management s ability to overcome possible obstacles. Higher Tax The Argentine government has increased taxes on Argentine companies and could further increase the fiscal burden in the future. Since 1992, the Argentine government has not permitted companies to adjust for inflation the value of their fixed assets for tax purposes. As a result of the substantial devaluation of the Argentine peso against the US dollar and significant inflation over the last decade, the amounts that the Argentine tax authorities permit Siderar to deduct as depreciation for its past investments in plant, property and equipment have been substantially reduced in real terms, thus creating artificial gains for tax purposes, which result in higher-than-nominal effective income-tax charges. In addition, provincial taxes on Siderar s sales have increased over the last few years. If the Argentine government continues to increase the tax burden on Siderar s operations, a negative impact could be seen on Ternium s operating and financial results. In the mining division, the recent increase in mining tax to 7.5% of Ebitda is likely to be kept for longer. We have 41.5% as corporate tax in our model, a level which is already higher than global peers, unlikely to be increased, in our view. Argentina Exchange Controls In the past, the Argentine government and the Argentine Central Bank introduced several rules and regulations to reduce volatility in the ARS/USD rate and implemented formal and informal restrictions on capital inflows into Argentina and capital outflows from Argentina. In addition, Siderar is currently required to repatriate into Argentina US dollars collected in connection with the country s exports (including US dollars from advance payments and pre-financing facilities) and convert them into Argentine pesos at the relevant exchange rate applicable on the date of repatriation. Since the last quarter of 2011, the Argentine government has tightened its controls on transactions that would represent capital outflows from Argentina, prohibiting the purchase of foreign currency for savings and formally or informally limiting the ability of Argentine companies to transfer funds (including in connection with the purchase of goods or services, or the payment of interest, dividends or royalties) to outside of Argentina. The existing controls, and any additional restrictions of this kind that may be imposed in the future could expose Ternium to the risk of losses arising from fluctuations in the exchange rate or affect Ternium s ability to finance its investments and operations in Argentina or impair Ternium s ability to convert and transfer abroad funds generated by Siderar, for example, to pay dividends or to undertake investments and other activities that require offshore payments. How to return cash to shareholders? Through dividends, a practice which has been in place and is accepted by the local legislation. Despite investors concern, TX s dividends have been paid for years. Changes in Exchanges Rates The operations Ternium companies expose them to the effects of changes in foreign currency exchange rates and regulations. A significant portion of Ternium s sales are denominated currencies other than the US dollar. As a result of this foreign currency exposure, exchange rate fluctuations impact the Ternium companies results and net worth, as reported in its income statements and statements of financial position in the form of both translation risk and transaction risk. Ternium companies enter, from time to time, into exchange rate derivatives agreements to manage their exposure to exchange rate changes. Future regulatory or financial restrictions in the countries where Ternium operates may affect its ability to mitigate its exposure to exchange rate fluctuations and thus cause an adverse impact on Ternium s operating and financial condition or cash flows. We highlight Ternium s top line are 100% USD linked while 75% of its COGS are USD linked, which represents a natural hedge for the company. Source: Company data, Credit Suisse estimates 11

What are the potential risks in Argentina? Related Party Minority shareholder could ultimately be negatively impacted by Ternium s transactions with companies controlled by San Faustin, as a result of Ternium s complex shareholder structure. While such transactions might not always carried out under terms as favorable as those that could be obtained from unaffiliated third parties, this has been a practice for some time, we believe those transactions are usually carried out under terms no less favorable than those they could obtain from unaffiliated third parties. Thus, this is not likely to be a negative catalyst for the stock. Asset Nationalization Asset expropriations in Argentina and other South American countries are still fresh in the memory of investors as one of the risks of doing business in emerging markets. Since President Cristina Kirchner shocked investors by announcing the proposal of a new measure to Congress in an attempt to recover sovereignty over Argentina-based assets of Spanish YPF, investors have raised eyebrows on the potential risks of nationalization of Ternium s operations in Argentina. While investors will continue to monitor this risk, we highlight that TX has been operating for years in Argentina without any major issues and was one of the few, if not the only, companies able to receive full payment from the Venezuelan government after the nationalization of its Sidor plant, confirming its ability to navigate well through a number of political changes in Latin America. Restriction of Imports The Argentine government has implemented significant import restrictions that may affect the supply of key steelmaking inputs for TX s Siderar operations in Argentina. While this has been mainly a theoretical rather than a real threat, any restrictions on the imports of key steelmaking inputs for Siderar s operations in Argentina could adversely affect its production and, as a result, its growth projects and results. All payments for imports of goods and services must be approved by the Argentine federal tax authority and other authorities, such as the Secretariat of Trade, and the criteria authorizing for such imports have not been established in applicable regulations. Following the same rationale, those measures could affect Siderar s exports from Argentina, considering that foreign countries may adopt and implement countermeasures. In our view, those are well controlled risks. The most challenging one would be a nosedive of Argentina s economy, forcing TX to export at any price. While this is a possibility, our economists maintain a positive bias on the country. Policital Interference Putting it in a simple way: Risks are there but we do not expect the government to fight against itself. We believe risks are relatively low to TX Argentina as the government has been a partner of Ternium in Siderar through ANSeS, Argentina s social security agency, which controls 26% of Siderar s voting shares. In fact, this has not caused any negative impact on minority shareholders. As a reminder, though, in February 2011 the Argentine government imposed controls on the price of steel products sold in Argentina, including products sold by Siderar, and required that sales of steel products be invoiced in Argentine pesos. Although Ternium believes that price controls are illegal under Argentine law and these measures were ultimately revoked, other price control or similar measures could be imposed in the future. We see low risk on this front as TX has well navigate thru different governments and even during challenging market conditions, TX was able to remain reporting healthy margins. Source: Company data, Credit Suisse estimates 12

Argentina The Peso Devaluation is a concern but not as headlines suggest February 2014 The recent governmental flexible policy brought year-to-date depreciation to ~20%, the highest devaluation of the peso in 12 years, TX s NY listed stock was hammered by investors. Headlines are a clear negative but Siderar s USD linked top line is a natural hedge for TX s exposure to Argentina. As of note, despite the peso depreciated 33% in 2013, Siderar s results remained fairly resilient, Ebitda/t went from 150/t in 2012 to 246/t in 9M13, in a scenario of flattish steel prices. Our take is that investors concern our overdue and excessive. Unquestionable additional depreciation. The official Argentina s foreign exchange reserves decrease to US$ 25bn (as of end 2013) from the healthier level of US$52bn by mid 2011, the trade surplus fell 67% y/y in 2013 period (which used to be one of the main tools to have dollar inflows), the capital account deficit remains due to ongoing outflows and limited access to international debt markets (default payments remain a recent story), lower competitiveness in the international market. In such scenario, which includes labor cost pressure and the avoidance of erosion of the competitiveness o the country, we have enough points to estimate a further devaluation of the Argentina peso, our house view is for a 11.74 ARS per USD at year-end 2014 and 15.48 ARS per USD at year-end 2015, although the move should be faster. Possible negative outcome include outrageous inflation levels, possibly above our official house view of average 21% in 2014 and 2015, an increase in consumer price and costs pressure workers through their unions could insist in maintaining real wages. The biggest concern for investors, in our view, should be the investment case of corporates which have a significant cash generation in Peso and cogs, SG&A and debt in USD, which would reflect in lower margins, higher financial expenses and an immediate debt leverage increase, which is not the specific case of TX s local business Siderar. As a global steel manufacturer, TX s Argentinean based operations are highly exposed to the USD on the cost side, as 75% of its COGS are USD or USD link, while its SG&A are 30% in USD or dollar linked, but at the same time 100% of its revenues are dollar linked, which does not mean they are in USD but with prices in local currencies that fluctuate according to FX. On a pure top line/cost structure, the depreciation of the Argentinean peso is positive for TX. In 9M13 the peso depreciated 18% but southern region (Argentina) net sales increased by 7% on the period and TX s consolidated Ebitda increased by 3%. Historical FX Rate ARS/USD Evolution 9 8 7 6 5 4 3 PX LAST The greatest downside will be in case of an additional uncontrolled devaluation of the Peso and a relevant recession, which was the case in 2001 (it went from 1 to 4 in a short term and Siderar was forced to export the majority of its products. 2 1 0 4-Jan-00 4-Jan-03 4-Jan-06 4-Jan-09 4-Jan-12 Source: Company data, Credit Suisse estimates, Bloomberg 13

FX ARS/USD (average) FX ARS/USD (average) February 2014 FX Analysis: Mexican and Argentinian Peso Impact Ternium has operations mainly in Mexico and Argentina but despite the local presence the company has 100% of its revenues linked to US dollar, which is the functional currency adopted to report its financial statements. Therefore any variation in the Mexican or Argentinian peso should not affect the company s reported revenues. On the other hand, ~15% and ~10% of its COGS are denominated in Mexican and Argentinian peso respectively, and ~40% and ~30% of its SG&A are denominated in Mexican and Argentinian peso respectively. Ternium s Currency Exposure Foreign Exchange Income Statement Revenues COGS SG&A Cash Balance Sheet Debt USD 100% 75% 30% 90% 75% MXN 0% 15% 40% 7% 0% ARS 0% 10% 30% 3% 25% 2014 Ebitda Sensitivity Analysis 2014 Net Income Sensitivity Analysis (cash earnings) FX MXP/USD (average) FX MXP/USD (average) 1,489 9.8 10.8 11.8 12.8 13.8 14.8 15.8 678 9.8 10.8 11.8 12.8 13.8 14.8 15.8 6.1 1,086 1,195 1,303 1,411 1,519 1,627 1,735 6.1 159 204 250 295 340 385 430 7.1 1,191 1,299 1,407 1,515 1,623 1,732 1,840 7.1 232 277 322 367 412 458 503 8.1 1,295 1,403 1,511 1,620 1,728 1,836 1,944 8.1 304 349 394 440 485 530 575 9.1 1,399 1,508 1,616 1,724 1,832 1,940 2,049 9.1 376 422 467 512 557 602 648 10.1 1,504 1,612 1,720 1,828 1,937 2,045 2,153 10.1 449 494 539 584 630 675 720 11.1 1,608 1,716 1,825 1,933 2,041 2,149 2,257 11.1 521 566 612 657 702 747 792 12.1 1,713 1,821 1,929 2,037 2,145 2,253 2,362 12.1 594 639 684 729 774 820 865 Source: Company data, Credit Suisse estimates 14

EV/EBITDA Steel February 2014 Valuation: Sum-of-the-Parts Analysis Our sum-of-the-parts analysis indicates a target price range of US$34.6 to US$42.7/share, depending on the multiple we use for both steel and mining operations. We assume a multiple of 6.2x EV/Ebitda for the steel business, which is based on global peers average trading multiple with 20% discount, and 5.5x EV/Ebitda for mining, and reached a fair value of US$38.6/share, which implies 25% upside to the current price. Sum-of-the-Parts Calculation (US$ mn) SOTP Breakdown (US$ bn) Ternium: Credit Suisse Estimates 2014 Mining Ebitda 45 Steel Ebitda 1,559 1.8 0.5 Multiples: Market 2014 Mining 5.5x Steel 6.2x 2.4 9.7 9.9 7.6 Sum of the Parts Analysis 2014 EV - Mining 245 EV - Steel 9,665 EV - Ternium 9,909 Net Debt 1,846 Stake Usiminas 562 Minority Interest 1,041 Equity - Ternium 7,585 Equity/Share 38.6 (+) Mining (+) Steel EV - Ternium (-) Net Debt (+/-) Adjustments Sensitivity Analysis EV/EBITDA Mining (=) Equity Ternium 40.0 4.0x 4.5x 5.0x 5.5x 6.0x 6.5x 7.0x 4.7x 26.4 26.5 26.6 26.7 26.8 27.0 27.1 5.2x 30.4 30.5 30.6 30.7 30.8 30.9 31.0 5.7x 34.3 34.4 34.6 34.7 34.8 34.9 35.0 6.2x 38.3 38.4 38.5 38.6 38.7 38.9 39.0 6.7x 42.3 42.4 42.5 42.6 42.7 42.8 42.9 7.2x 46.2 46.3 46.5 46.6 46.7 46.8 46.9 7.7x 50.2 50.3 50.4 50.5 50.7 50.8 50.9 Source: Company data, Credit Suisse estimates 15

Valuation: TP of US$38/Share (23% Upside), Outperform Our DFC generated TP is based on a cost of equity of 14.5% which is derived from (i) risk free (US) of 3%, (ii) country risk premium of 5.5%, (iii) equity risk premium of 6% and (iv) a beta of 1.0. Our country risk premium is based the Argentinean country risk (10y CDS) of 15%, which in our view is closer to a normalized level. Assuming the current 21% CDS level, our TP would decrease to US$32/shr, while in the case of a 5% risk premium, our TP would increase to US$ 42/shr. We are updating our estimates for Ternium and increasing our target price to US$38/share from US$29.8/share, implying 23% upside from current levels. We reiterate our Outperform rating on the stock as we believe that Ternium represents a good vehicle to play the combination of fast growth Mexican story at low risk/ multiples and limited Argentinean risks. Ev/Ebitda: Ternium vs. Global Peers Estimates 4.4x 7.4x 6.5x 3.9x Ternium Global Steel Average 3.2x 2014 2015 2016 6.3x Stocks, Ibovespa & Mexbol Performance (Index: 100 = Jan 03, 2013) 140 130 120 110 100 90 80 70 60 50 Usiminas Mexbol Ternium CSN February 2014 Ibovespa Gerdau 40 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Ev/Ebitda: Ternium Historical Discount to Peers 20% 10% 0% -10% -20% -30% -40% -50% -60% -70% Max Average Min Discount -80% Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Source: Credit Suisse estimates, Bloomberg, Company data 16

Changes in Estimates We are increasing our target price for Ternium from US$29.8/share to US$38/share and we reiterate our Outperform rating on the stock. The main changes incorporated in our model are (i) reported results, (ii) lower capex, as the company is at the end of its investment cycle, starting up its new steel plants in 2014, (iii) conservative assumptions for the volume ramp up of the new mills, and (iv) higher cost of equity (from 12.2% to 14.5% as a result of higher Country Risk Premium due to exposure to Argentina). Ebitda growth between years 2013-2016 is mainly explained by the ramp up of new operations in Mexico with the Pesquería and Tenigal plants start-up, which we estimate to add 500Kt capacity in 2014, 300kt in 2015 and 200Kt in 2016, resulting in additional 1Mt of sales volume after the full ramp up; and in Argentina, with the slab capacity expansion of 500kt, which we estimate to reach full ramp up in 2016. Ebitda Path and Margin Breakdown (in US$ mn and %) 1,479 1,724 1,842 1,982 2,034 Changes in Estimates 2013E 2014E 2015E 2016E 2017E Net Revenues (US$mn) New 8,596 9,100 9,724 10,474 10,837 Old 8,983 9,647 10,440 10,948 11,462 Change (%) -4% -6% -7% -4% -5% EBITDA (US$mn) New 1,479 1,724 1,842 1,982 2,034 Old 1,449 1,640 1,868 1,938 2,065 Change (%) 2% 5% -1% 2% -2% EBITDA Margin (%) New 17% 19% 19% 19% 19% Old 16% 17% 18% 18% 18% Change (%) 7% 11% 6% 7% 4% Net Income (US$mn) New 550 512 667 815 878 Old 488 581 698 740 817 Change (%) 13% -12% -4% 10% 7% EPS (US$/shr) New 2.80 2.61 3.40 4.15 4.47 Old 2.49 2.96 3.55 3.77 4.16 Change (%) 13% -12% -4% 10% 7% Consolidated Ebitda Margin (%) 19% 19% 19% 19% 17% 15% 2013E 2014E 2015E 2016E 2017E 2012 2013 2014 2015 2016 2017 Source: Credit Suisse estimates 17

Liquidity and Dividend Payment What to expect of liquidity? TX s ADS (American Depositary Shares) are listed on the New York Stock Exchange (NYSE) and average daily trading volume has been US$10.2mn so far in 2014. The company increased its free float considerably in 2010, from 13.6% to 24.4%. Lack of liquidity remains an obstacle for some investors, as Ternium is not included in a relevant index. Recurring questions from investors suggested TX could be listed in another exchange, a possibility we which we see low in the short to mid terms. TX would need to have a reason to go for liquidity, such as financing themselves for a greater expansion, which we do not expect in the foreseeable horizon. 2006 2013 2016 Dividends will be paid but are not a catalyst Ternium does not have an official policy for dividend payment and, according to its bylaws, it is not obliged to pay a minimum dividend. Despite that, the company has historically paid annual dividends with an average yield of 2.2%, excluding 2009, when the company paid no dividends due to the financial crisis, and 2011, when the company paid extraordinary dividends. Based on historical dividend payments, we forecast yearly payments of US$155mn going forward, which averages an yield of 2.6%. However, we believe there could be upside to that number as the company is at the end of its capex cycle and the new projects should increase its cash flow generation. Dividend Payment and Yield 5.3% Dividend Payment (in US$mn) Dividend Yield ADSs are listed on NYSE under the symbol TX Trading began on February 1, 2006. As of March 31, 2013, a total of 489,930,470 shares were registered on behalf of Euroclear and Clearstream, mostly related to the Company s ADR program. Free Float Evolution (% of shares outstanding) 24.4% 24.4% Listing in another Exchange?? 24.4% 2.2% 2.3% 2.1% 288 2.7% 2.6% 2.6% 2.6% 2.6% 2.6% 120 120 139 163 155 155 155 155 155 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Capex (in US$mn) 1,023 995 15.2% 15.2% 13.6% 13.6% 436 582 204 339 577 713 416 444 453 2006 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Company data, Credit Suisse estimates 18

Ternium & Usiminas The Investment On January 16, 2012 Ternium concluded its investment in Usiminas, acquiring 22.7% of its common shares (114.7mn shares) and 11.3% of its preferred shares (57.5mn shares) for US$2.2bn. Ternium joined the control group of Usiminas together with Tenaris Conafb and the combined stake of both companies represents 27.7% of Usiminas voting capital. The controlling group holds 63.9% of Usiminas voting capital and is composed of (i) Nippon Group, which owns 46.1% of the total shares owned by the control group, (ii) Ternium/Tenaris, which owns 43.3% of the total shares owned by the control group, and (iii) Previdência Usiminas (Usiminas employee pension fund), which holds the remaining 10.6%. As a result of an impairment test Ternium performed in its investment in Usiminas, Ternium wrote down the investment by US$275.3mn, which was recorded in 4Q12 results and mainly a result of a weaker industrial environment in Brazil. An additional impairment is unlikely in our view. Usiminas Overview Usiminas is a Brazilian integrated steel player focused on the production and sale of the following flat-rolled products: plates, heavy plates, hot rolled, cold rolled (uncoated products), electro galvanized and hot dip galvanized (coated products). PN 508,525,506 ON (Voting Capital) 505,260,684 1,013,786,190 50.16% 49.84% Total Capital Control Group 63.86% of Voting Capital Free-float Usiminas Pension Fund 36.1% 6.8% Control Group 27.7% 29.5% Ternium/ Tenaris Nippon Group Stock Performance of Usiminas since Ternium s Acquisition 21 70,000 Integrated Steel Plant Iron ore, hot metal and finished steel products. Iron ore is purchased at market price (100% self sufficiency), while no self sufficiency in coal. 19 17 15 13 USIM3 Ibovespa 65,000 60,000 55,000 Mix of Products Domestic vs. Export 35% hot rolled, 21% heavy plates, 23% cold rolled, 13% hot dip galvanized, 4% slabs, 2% processed products, 2% electrogalvanized. 85-90% domestic market sales and 10-15% exports. 11 50,000 9 7 USIM5 45,000 5 40,000 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Cash Cost Breakdown Steel Customers 19% labor, 15% coke and coal, 13% iron ore, 22% other raw materials, 9% inventories, 9% energy, 8% depreciation, and 5% others. 33% automotive segment, 19% industry, 6% white goods, 33% distribution, and 8% civil construction. Source: Company data, Credit Suisse estimates 19

BlueScope Steel Salzgitter Sims Metal Management Baosteel Usiminas Hitachi Metals Nucor Corporation Thyssen Krupp AG Ternium Vallourec ArcelorMittal Steel Dynamics, Inc Novolipetsk Steel Voestalpine Gerdau Severstal Magnitogorsk Steel Maanshan Iron & Steel Co Ltd Nippon Steel & Sumitomo Metal Angang Steel Company Ltd POSCO TMK United States Steel Group Acerinox China Steel Companhia Siderurgica Nacional Kobe Steel JFE Holdings Hyundai Steel Co. Tata Steel Ltd JSW Steel Ltd SSAB Steel Authority of India Ltd AK Steel Holding Corp. Mechel Mechel United States Steel Group JSW Steel Ltd Magnitogorsk Steel SSAB BlueScope Steel Sims Metal Management Salzgitter Acerinox Maanshan Iron & Steel Co Ltd Usiminas Angang Steel Company Ltd ArcelorMittal Novolipetsk Steel POSCO JFE Holdings Gerdau Severstal Hyundai Steel Co. Vallourec China Steel Steel Authority of India Ltd Baosteel Ternium Nippon Steel & Sumitomo Metal Tata Steel Ltd Thyssen Krupp AG Kobe Steel Steel Dynamics, Inc Hitachi Metals Nucor Corporation Voestalpine TMK AK Steel Holding Corp. Companhia Siderurgica Nacional Baosteel Angang Steel Company Ltd Magnitogorsk Steel Ternium ArcelorMittal Maanshan Iron & Steel Co Ltd TMK Severstal Salzgitter BlueScope Steel Vallourec Steel Dynamics, Inc Usiminas POSCO Gerdau Companhia Siderurgica Nacional Nippon Steel & Sumitomo Metal Kobe Steel Voestalpine Tata Steel Ltd Novolipetsk Steel United States Steel Group Hitachi Metals Nucor Corporation Thyssen Krupp AG JFE Holdings JSW Steel Ltd Hyundai Steel Co. China Steel Mechel SSAB Sims Metal Management Acerinox Steel Authority of India Ltd AK Steel Holding Corp. AK Steel Holding Corp. Magnitogorsk Steel Mechel Maanshan Iron & Steel Co Ltd ArcelorMittal POSCO Salzgitter Baosteel Angang Steel Company Ltd Hyundai Steel Co. SSAB Steel Authority of India Ltd Usiminas BlueScope Steel JFE Holdings Ternium Novolipetsk Steel Kobe Steel Vallourec Severstal Tata Steel Ltd Gerdau TMK JSW Steel Ltd Nippon Steel & Sumitomo Metal Sims Metal Management Voestalpine Steel Dynamics, Inc China Steel Acerinox Hitachi Metals Companhia Siderurgica Nacional Nucor Corporation United States Steel Group Thyssen Krupp AG February 2014 Ternium vs. Global Peers It might be worthwhile keeping some balance sheet metrics in mind when thinking about TX s investment case. From comparable multiples Ev/Ebitda confirming a sizeable discount to global peers, to P/B, ROE and leverage, Ternium scores well when compared to global peers. EV/EBITDA Price/Book 20x 16x 12x 8x 4x EV/EBITDA 2014 EV/EBITDA 2015 4x 3x 2x 1x 0x -1x P/B 2014 P/B 2015 0x -2x Net Debt/EBITDA 14x 12x 10x 8x 6x 4x 2x 0x -2x Net Debt/Ebitda 2014 Net Debt/Ebitda 2014 ROE 30% 20% 10% 0% -10% -20% -30% -40% ROE 2014 ROE 2015 Source: Company data, Credit Suisse estimates, Bloomberg 20

Ternium Steel Business Reasons for Robust margins TX has captive market share, high value added products, state of the art technology, it is vertically integrated with its own iron ore mines and service centers resulting in upstream and downstream integration, has a flexible production configuration and broad distribution network. All these factors help the company to deliver healthier margins than average of the global industry, despite market conditions. Steel Ebitda/ton (USD) Global Peers 2009 2010 2011 2012 2013E Tata Steel India 371 308 384 352 259 JSPL 276 255 341 378 231 Companhia Siderurgica Nacional 338 459 314 182 185 111 178 189 140 151 JSW Steel 178 154 160 138 125 Ternium initiatives to reduce costs and enhance productivity Labor productivity Program aims to optimize organizational structure TX white-collar (WC) productivity (hot-rolled production per WC employee) 100 4.6 +81% -37% 181 2.9 Blue-collar (BC) productivity in Mexico (hot-rolled production per BC employee) 100 8.5 +50% -19% 150 6.9 Baosteel 148 172 121 100 124 Gerdau 143 169 146 113 112 AK Steel Holding Corp. 83 61 81 73 88 2005 2012 WC productivity (base 100 = 2005) WC headcount 2005 2012 BC productivity (base 100 = 2005) BC headcount in Mexico Usiminas 170 157 47 28 79 SAIL 165 164 130 97 67 Angang 67 85 50 27 61 ArcelorMittal n.a. 87 85 68 61 Magang 67 72 57 38 49 Nucor Corporation -6-43 -8 9 47 United States Steel Group -83 11 51 47 35 Tata Steel Europe 85-16 46 16 9 Industrial excellence program Top management is involved in efficiency gains of production process through a systematic approach with on-site scheduled meetings with personnel in charge of production lines. Supply chain Demand planning model to predict demand accurately, optimize inventories and maximize output. Source: Company data, Credit Suisse estimates, Bloomberg 21

Summary Valuation Comps for Steel Companies Company Ticker Rating Country Currency Price Target Price Mkt Cap in US$ February 2014 EV/EBITDA P/E Net Debt/EBITDA 2013 2014 2015 2013 2014 2015 2013 2014 2015 Emerging Markets 7.5x 6.8x 6.8x 2.7x 5.6x 13.9x 3.7x 3.6x 3.6x Ternium TX OUTPERFORM MX USD 31.0 38.0 6,078 5.2x 4.4x 3.9x 11.1x 11.9x 9.1x 1.1x 0.9x 0.6x Companhia Siderurgica Nacional CSNA3 NEUTRAL BR BRL 11.3 12.0 6,636 7.1x 7.0x 8.0x 25.2x 10.9x 16.1x 3.9x 4.0x 4.7x Gerdau GGBR4 NEUTRAL BR BRL 15.9 21.0 10,868 8.2x 6.8x 5.7x 20.7x 14.5x 10.5x 2.6x 2.1x 1.6x Usiminas USIM5 OUTPERFORM BR BRL 10.9 15.0 4,451 9.0x 6.0x 4.9x -112.7x 17.8x 10.0x 1.9x 1.0x 0.6x Steel Authority of India Ltd SAIL.BO UNDERPERFORM IN INR 60.2 30.0 4,021 10.8x 12.8x 15.6x 11.5x 8.4x 18.8x 4.6x 6.3x 8.8x Tata Steel Ltd TISC.BO UNDERPERFORM IN INR 374 210 5,866 8.5x 7.4x 8.8x -5.2x 11.1x 22.4x 5.2x 4.8x 5.9x JSW Steel Ltd JSTL.BO UNDERPERFORM IN INR 848 540 3,316 6.4x 7.5x 7.8x 33.7x 69.2x 19.8x 3.1x 4.6x 4.8x Magnitogorsk Steel MAGNq.L OUTPERFORM RU USD 2.6 3.6 2,177 4.3x 3.7x 3.1x -7.8x -106.3x 35.2x 2.9x 2.3x 1.8x Mechel MTL.N UNDERPERFORM RU USD 2.1 1.9 891 9.8x 9.1x 7.9x -0.4x -3.0x -5.2x 11.5x 10.5x 9.0x Novolipetsk Steel NLMKq.L UNDERPERFORM RU USD 15.4 14.9 9,242 8.2x 6.7x 6.5x 28.2x 16.6x 17.6x 2.1x 1.6x 1.4x Severstal CHMFq.L NEUTRAL RU USD 8.6 10.3 6,995 5.5x 4.9x 4.3x 18.1x 8.7x 7.2x 2.0x 1.6x 1.3x TMK TRMKq.L OUTPERFORM RU USD 11.6 14.0 2,518 6.4x 5.6x 4.9x 10.3x 6.7x 5.7x 3.7x 3.2x 2.7x Asia & Australia 10.3x 7.0x 6.0x 27.8x 17.2x 11.8x 4.0x 2.7x 2.2x Baosteel 600019.SS OUTPERFORM CN CNY 3.9 5.7 10,899 4.8x 3.7x 3.0x 9.3x 7.7x 7.0x 1.4x 0.7x 0.1x Angang Steel Company Ltd 0347.HK NEUTRAL CN HKD 5.1 4.1 713 4.4x 3.7x 3.4x 28.6x 15.8x 11.7x 3.6x 3.0x 2.8x Maanshan Iron & Steel Co Ltd 0323.HK UNDERPERFORM CN HKD 1.9 1.3 1,847 6.5x 4.9x 3.8x -36.7x 13.3x 6.2x 3.7x 2.6x 1.9x China Steel 2002.TW UNDERPERFORM TW TWD 25.9 23.1 13,188 10.0x 9.8x 9.3x 27.3x 22.2x 20.6x 3.6x 3.5x 3.0x Hitachi Metals 5486 NEUTRAL JP JPY 1,526 1,200 6,402 17.0x 8.0x 6.6x 43.0x 17.2x 13.9x 2.6x 1.0x 0.6x JFE Holdings 5411.T NEUTRAL JP JPY 2,050 2,200 11,605 11.6x 8.0x 6.9x 29.9x 12.2x 9.2x 6.5x 4.5x 3.9x Kobe Steel 5406.T UNDERPERFORM JP JPY 144.0 150.0 4,240 10.9x 6.9x 6.7x -16.0x 7.1x 9.8x 7.2x 4.5x 4.4x Nippon Steel & Sumitomo Metal 5401.T NEUTRAL JP JPY 300.0 330.0 26,853 16.7x 7.2x 5.6x -21.9x 11.8x 9.1x 7.8x 3.0x 2.1x Hyundai Steel Co. 004020.KS NEUTRAL KR KRW 79,600 84,000 8,751 13.2x 8.7x 7.9x 13.0x 10.1x 9.4x 7.5x 4.9x 4.3x POSCO 005490.KS NEUTRAL KR KRW 295,500 330,000 24,301 8.0x 7.1x 6.5x 17.1x 10.7x 9.1x 3.4x 3.0x 2.8x BlueScope Steel BSL.AX OUTPERFORM AU AUD 5.9 5.7 2,981 8.2x 6.7x 4.7x 113.4x 48.5x 18.1x 0.4x 0.2x -0.3x Sims Metal Management SGM.AX UNDERPERFORM AU AUD 10.6 10.0 1,955 12.1x 9.8x 7.1x 126.6x 29.5x 17.1x 0.8x 0.8x 0.3x Developed Markets 11.4x 8.4x 6.9x -128.0x 35.8x 35.2x 3.7x 2.6x 2.0x Voestalpine VOES.VI NEUTRAL AT EUR 33.1 38.0 7,834 7.1x 7.4x 7.2x 12.7x 12.4x 10.4x 1.9x 2.1x 2.3x Steel Dynamics, Inc STLD OUTPERFORM CA USD 17.9 20.0 3,967 9.1x 6.7x 5.0x 22.2x 14.3x 10.3x 2.8x 1.8x 1.0x Salzgitter SZGG.DE OUTPERFORM DE EUR 32.1 42.0 2,646 7.1x 5.9x 4.4x -4.3x 20.0x 9.5x 0.0x 0.1x -0.3x Thyssen Krupp AG TKAG.F OUTPERFORM DE EUR 20.1 23.0 15,597 13.0x 8.4x 7.1x -12.4x 33.7x 18.1x 3.0x 1.2x 1.2x Acerinox ACX.MC NEUTRAL ES EUR 10.4 7.8 3,658 17.2x 13.6x 12.7x -1432.8x 65.1x 46.3x 4.1x 3.5x 3.5x Vallourec VLLP.PA OUTPERFORM FR EUR 40.4 50.0 7,103 7.9x 7.1x 5.2x 22.7x 16.6x 9.2x 2.2x 2.0x 1.3x ArcelorMittal MT.N OUTPERFORM NL USD 16.8 20.0 29,777 7.4x 5.4x 4.5x -11.7x 17.3x 10.8x 2.3x 2.0x 1.5x SSAB SSABa.ST NEUTRAL SE SEK 52.1 52.0 2,533 24.0x 12.0x 6.9x -16.1x -179.6x 12.5x 12.6x 6.5x 3.5x AK Steel Holding Corp. AKS UNDERPERFORM US USD 6.9 3.3 942 11.2x 8.5x 8.2x -20.0x 318.5x 128.0x 5.8x 4.3x 3.8x Nucor Corporation NUE OUTPERFORM US USD 51.3 55.0 16,312 12.4x 9.8x 7.3x 33.6x 21.5x 14.5x 1.9x 1.6x 0.9x United States Steel Group X NEUTRAL US USD 27.2 19.0 3,939 8.7x 7.5x 7.4x -2.2x 54.3x 117.3x 4.0x 3.3x 3.1x Source: Company data, Credit Suisse estimates, Prices as of February 17, 2014. 22

Fact Sheet (1/2) BASICS COMPANY DESCRIPTION Sector Steel Ticker TX Ternium is one of the leading steel companies in Latin America with an annual crude steel Price (US$) 30.96 production capacity of 10.8 million tons. The company manages highly-integrated processes Target (US$) 38.0 to manufacture steel and value-added products and services, with operations in Argentina, Recommendation OUTPERFORM Mexico, US and Guatemala. Mkt. cap. (US$mn) 6,078 POSITIVES Privileged cost structure, captive iron ore mines in Mexico. SHAREHOLDERS (%) % Total Strong market position, with important presence in North and South America. Techint Group 62% Overly discounted valuations. Tenaris 11% Treasury Shares 2% BASICS Public 24% Still not self sufficient in slab sourcing. Depends on 3rd party purchases. TOTAL 100% COST BREAKDOWN - 2Q13 Others in US$ 30% Semi-finished 21% STEEL EBITDA/TON (US$/t) 200 180 Iron ore 8% 160 140 Scrap 8% 120 Others in local currency 18% Electricity 4% Natural gas 5% Zinc 3% Coal 3% 100 80 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 Source: Company data, Credit Suisse estimates, Bloomberg 23

Fact Sheet (2/2) FINANCIAL METRICS (US$mn) 2012A 2013E 2014E 2015E 2016E 2017E OPERATING METRICS 2012A 2013E 2014E 2015E 2016E 2017E Net revenues 8,608 8,596 9,100 9,724 10,474 10,837 Mexico steel shipments (kt) 4,952 5,037 5,460 5,670 6,059 6,059 COGS (6,869) (6,687) (6,961) (7,407) (7,968) (8,257) S. Region steel shipments (kt) 2,445 2,604 2,700 2,880 2,970 2,970 EBIT 918 1,102 1,331 1,427 1,538 1,581 Other Markets shipments (kt) 1,371 1,456 1,440 1,440 1,440 1,440 EBIT margin 11% 13% 15% 15% 15% 15% Total steel shipments (kt) 8,768 9,097 9,600 9,990 10,469 10,469 EBITDA 1,289 1,479 1,724 1,842 1,982 2,034 Total steel revenues (US$mn) 8,572 8,495 8,440 8,384 8,499 8,644 EBITDA margin 15% 17% 19% 19% 19% 19% Other revenues (US$mn) 36 102 660 1,340 1,975 2,193 Adj EBITDA 1,289 1,479 1,724 1,842 1,982 2,034 Adj. EBITDA margin 15% 17% 19% 19% 19% 19% Net income 158 550 512 667 815 878 Net margin 2% 6% 6% 7% 8% 8% LEVERAGE 2012A 2013E 2014E 2015E 2016E 2017E Outstanding shares (mn) 196 196 196 196 196 196 Net debt/ Adj. EBITDA 1.4x 1.1x 0.9x 0.6x 0.1x -0.3x EPS 0.8 2.8 2.6 3.4 4.2 4.5 Net debt / Equity 0.3x 0.3x 0.3x 0.2x 0.0x -0.1x Operating cash flow 1,056 1,209 1,002 1,082 1,365 1,564 Capex / Depreciation 2.3x 2.3x 1.8x 1.0x 1.0x 1.0x NOPLAT 450 672 779 835 900 925 Capex / Operat.Cash Flow 0.8x 0.7x 0.7x 0.4x 0.3x 0.3x Depreciation 371 377 393 416 444 453 Capex 840 878 713 416 444 453 RETURN / YIELD 2012A 2013E 2014E 2015E 2016E 2017E FCFE 618 127 631 748 825 981 ROIC 6% 9% 10% 11% 11% 12% Dividends /IOE 163 155 155 155 155 155 WACC 11% 11% 11% 11% 11% 11% Total assets 10,867 10,743 11,622 12,534 13,511 14,579 Cost of Equity (ke) 14% 14% 14% 14% 14% 14% Cash 560 454 927 1,630 2,501 3,571 ROE 3% 10% 9% 11% 12% 11% Debt 2,424 2,132 2,471 2,663 2,768 2,882 FCFE Yield 10% 2% 10% 12% 14% 16% Net debt 1,864 1,678 1,544 1,033 267 (689) Div. Yield 2.7% 2.6% 2.6% 2.6% 2.6% 2.6% Investments 1,711 1,435 1,402 1,366 1,327 1,286 Net PP&E 4,438 4,938 5,258 5,258 5,258 5,258 VALUATION 2012A 2013E 2014E 2015E 2016E 2017E Minority interest 1,066 1,083 1,236 1,389 1,541 1,694 EV / EBITDA 6.2x 5.2x 4.4x 3.9x 3.2x 2.6x Shareholders' equity 5,369 5,475 5,832 6,344 7,004 7,727 EV / IC 1.1x 1.1x 1.0x 0.9x 0.8x 0.7x Market cap (ON) 6,078 6,078 6,078 6,078 6,078 6,078 P/E 38.4x 11.1x 11.9x 9.1x 7.5x 6.9x Adj. EV 7,942 7,756 7,621 7,111 6,345 5,389 P/B 1.1x 1.1x 1.0x 1.0x 0.9x 0.8x Op. Invested Capital 7,077 7,214 7,534 7,833 7,922 7,886 EV/Sales 0.9x 0.9x 0.8x 0.7x 0.6x 0.5x Source: Company data, Credit Suisse estimates, Bloomberg 24

Appendix TX Corporate Structure Board Members and Management Production Configuration Latam Steel Market 25

Ternium s Company History History Main Historical Milestones Propulsora Siderúrgica was founded in Argentina by San Faustin s predecessor Propulsora merged with Aceros Parana (Somisa), which was at the time one of the largest integrated producer of flat steel in Argentina, and three other affiliated steel industry companies. After the conclusion of the merger, the company changed its name to SIDERAR, which controlling interest was held by San Faustin, and the remainder being held mainly by Usiminas, former employess of Somisa and the public. Company launches its IPO of 4,844,720 ADSs, each representing 10 shares of the Company, in US, on January 11, 2006. On December, 2006, the company acquired n additional 4.85% interest in Siderar from CVRD Internacional S.A, thereby increasing its ownership in Siderar to 60.93%. On August, 2010, Ternium acquires 54% of ownership in Ferrasa Panama and Ferrasa, which has a 100% ownership interest in Siderúrgica de Caldas S.A.S., Figuraciones S.A.S. and Perfilamos del Cauca S.A.S., all of which are also Colombian companies. On October, 2010, Ternium and ippon singed an agreement to form Tenigal, a company to serve the Mexican automobile market with the sale of hot-dip galvanized and galvannealed steel sheets (please refer to page XX for additional details). Ternium inaugurates Pesqueria Project with 1.5mtpy CRC production capacity that should start to ramp-up in 2014 (please refer to page XX for additional details). 1961 1969 1993 1997 2005 2006 2007 2008 2010 2012 2013 Propulsora Siderúrgica began its operations as a producer of CRC products The consortium composed by San Faustin, Siderar, Usiminas, Hylsamex and Sivensa won the bid in the privatization of a controlling interest in Sidor, which was the largest steel company in the Andean market. Together with Siderar, the Company acquires an indirect 99.3% interest in MX company Hylsamex and its subsidiaries. Grupo Imsa came under the Company s control after an agreement with Grupo Imsa and Grupo Imsa s controlling shareholders. Ternium, through a wholly owned subsidiary, made a cash tender offer under applicable Mexican law for all of the issued and outstanding share capital of Grupo Imsa, which resulted in the acquisition of 25,133,856 shares, representing 9.3% of the issued and outstanding capital of Grupo Imsa. After that, Grupo Imsa was renamed Ternium Mexico. Hylsamex merged with and into Ternium Mexico. In connection with this merger, Siderar became a shareholder of Ternium Mexico with a 28.7% interest on March, 2008. The Venezuelan government ordered that Sidor and its subsidiaries and associated companies were transformed into state-owned enterprises on May, 2008. Ternium joins Usiminas control group through the acquisition of 84.7 million ordinary shares (please refer to page XX for additional details). Source: Company data, Credit Suisse estimates 26

Ternium s Corporate Structure TX corporate structure is rather complex, but ultimately the company is controlled by the Rocca family, who controls 73.5% of Ternium s voting shares through (i) Techint (62% of TX s shares) and (ii) Tenaris (11.5% of TX s voting shares). Techint 62.02% Tenaris Ternium International Directors & Senior Mgmt Public 11.46% 2.08% 0.04% 24.40% Siderar Shareholders Siderar Shareholders Number of Shares % Ternium 2,75,28,08,188 60.94% ANSeS 1,17,58,06,541 26.03% Inversora Siderurgia Argentina (employees) 11,58,57,898 2.56% Public 47,26,21,396 10.46% Total 4,51,70,94,023 100.00% 71% 61% 17% 1 51% 54% 100% 100% 50% 29% 6% 1 Mexico Guatem ala USA 39% 49% 46% 100% 50% Las Encinas Peña Colorada 50% Other Subsidiaries CEU: 7% 1 Nippon Steel & Sum itom o Metal: 29% 1 TenarisCofab:5% 1 Other (ordinary shares): 36% Joint Operations Other Non-consolidated company Direct Indirect Total Ternium Mexico 71% 17% 89% Siderar 61% 61% Usiminas 2 8% 2% 10% Tenigal 51% 51% Ferrasa 54% 54% TX Guatemala 100% 100% TX USA 100% 100% Las Encinas 71% 17% 89% Peña Colorada 36% 9% 45% 1 Usiminas control group member. Participation based on ordinary shares distributed 2 Participation based on total shares distributed Source: Company data, Credit Suisse estimates 27

Ternium s Management, Board and Ownership Amongst all steel names on a global perspective Ternium has one of the most mature and experience executives, who have been in with the company for about 7-8 years. Directors have a wide range of experience in the steel business, out of them we highlight the company s chairman Mr. Paolo Rocca, who has held a number of relevant positions in the global sector, including a Member of International Advisory Committee of NYSE Euronext, Inc and a member Executive Committee of World Steel Association. Board of Directors Name Position Principal Occupation Years as Director Age at Dec-31, 2012 Paolo Rocca Chairman Chairman and CEO of Tenaris, director and vice president of San Faustin 8 60 Ubaldo Jose Aguirre Director Managing director of AGM/R S.A. and Aguirre y Gonzalez S.A. 7 64 Roberto Bonatti Director President of San Faustin 8 63 Carlos Condorelli Director Director of Tenaris 7 61 Adrian Lajous Vargas Director President of Petrométrica, S.C. 7 69 Bruno Marchettini Director Director of San Faustin and senior advisor in technology matters for the Techint group 7 71 Daniel Agustin Novegil Director CEO of the Company 8 60 Gianfelice Mario Rocca Director Chairman of the board of directors of San Faustin, director of Tenaris and president of Humanitas Group 7 64 Pedro Pablo Kuczynski Director Senior advisor to The Rohatyn Group 6 74 Senior Management Name Age at Dec- 31, 2012 Position Daniel Novegil 60 CEO, Director Pablo Brizzio 42 CFO Máximo Vedoya 42 Mexico Area Manager Martín Berardi 55 Siderar Executive VP Héctor Obeso 48 International Area Manager Oscar Montero Martínez 52 Planning and Operations General Director Luis Andreozzi 62 Engineering and Environment Director Rodrigo Piña 40 Human Resources Director Roberto Demidchuk 51 CIO Rubén Herrera 55 Quality and Product Director Source: Company data, Credit Suisse estimates 28

Production Configuration Below we show Ternium s production configuration of its plants in Argentina and Mexico. The two main input costs of the company are iron ore and slabs, which Ternium buys from 3rd parties. Current steel production installed capacity is 10.8Mt, which we estimate to increase from 2014 onwards as a result of the start up of Pesqueria and Tenigal projects, which combined should add 1.5Mtpy capacity. Mexico Scrap Natural Gas Continuous Casting 1 (4.0 mtpy) Flat/Long Hot Rolling (3.4 mtpy) Direct Reduction (2.7 mtpy) Pellet Value Adding Processes Hot Strip Mills (3.7 mtpy) Market Proprietary Iron Ore Mines (3.9 mtpy) Round Bar Billet Sales Slab Purchases Slab Sales Pellet Concent. Fine Sales Pellet Argentina Iron Ore (Corumba, Coking Atlantic) Coal Pet Coke Blast Furnaces (3.9 mtpy) Continuous Casting (2.9 mtpy) Hot Strip Mills (2.8 mtpy) Value Adding Iron Ore Supply Ternium uses iron ore as raw material to produce steel in its facilities in Mexico and Argentina. Iron ore supply in Mexico comes from its own mines, Las Encinas and Pena Colorada, of which the company annually uses ~3.9Mt currently. With the startup of Tenigal and Pesqueria projects, Ternium will purchase additional slabs from third parties, therefore iron ore consumption shouldn t change. In Argentina, the company buy 100% of its iron ore needs in the region, being the Corumbá region in Brazil its main supplier. Currently the company buys ~4Mt annually in the region, which we estimate to remain stable going forward. Slabs from 3 rd parties In its Mexican operations the company has a shortage of slab, therefore it buys from third parties in the local market. With the start-up of new slab capacity of 500Ktpy in Argentina, we estimate that most of the new capacity will replace 3 rd party purchases in Mexico. Domestic & Regional Market Domestic & Regional Market 1 Includes a scrap-only long steel manufacturing facility with capacity of 0.8 mtpy Source: Company data, Credit Suisse estimates 29

LatAm Steel Market LatAm crude steel producers have a market share of ~5%, just below 70Mt of production, out of 1.5Bt produced in the globe; Brazil remains the main producer, with a share of over 52%, followed by Mexico, a distant second place, with 27% share of production. The remaining production is shared by various players; Argentina is another significant producer, with 5.5Mt of production or 8% of the total share. Evolution of LatAm Crude Steel Production (Mt) Steel Production Breakdown (mn. tonnes) 70 60 50 40 30 20 10 0 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 30.5 27.5 27.9 28.1 27.0 26.0 26.9 26.926.0 26.926.2 26.326.8 24.4 22.5 23.6 22.3 21.1 21.0 21.2 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Flat Steel Long Steel Steel Consumption (Mt tonnes) Steel Consumption Per Capita (Kg/ capita) 65 66 61 13% 62 11% 11% 53 7% 59 60 44 53 4% 5% 3% 48 1% -14% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 200 180 160 140 120 100 80 60 40 2007 2008 2009 2010 2011 2012 2013 Argentina Brasil Chile Colombia México Perú Venezuela Source: Alacero, WSA 30

Mexican Steel Market The Mexican steel industry represents 27% of LatAm s total production and is composed of 16 steel mills, controlled by 8 corporate groups, with a total crude steel installed capacity of 22.5Mt and production of ~18Mt (8Mt of flat steels and 7.7Mt of long steels). Steel Production Evolution (mn. tonnes) Steel Production Breakdown (mn. tonnes) 16.7 16.2 16.3 17.6 17.2 8% 14.0 16.7 20% 18.2 18.1 17.6 9% 9.0 8.8 8.3 8.2 7.7 7.0 7.0 6.4 6.4 6.5 Flat Steel Long Steel 7.5 7.5 7.8 7.2 7.5 7.3 6.9 6.1 6.3 6.5-3% 1% -2% -1% -3% -19% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Finished Steel Trade Balance (mn. tonnes) Steel Consumption (mn. tonnes) Imports Exports 6.1 5.5 5.1 4.7 4.0 2.3 2.1 2.0 2.1 2.2 5.4 3.0 5.8 3.3 7.4 7.4 3.7 3.4 16.8 17.2 2% 18% 20.3 19.5 19.1-4% -2% 14.9 13% 16.9 19.3 19.9 18 7% 7% 3% 2005 2006 2007 2008 2009 2010 2011 2012 2013-22% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Alacero, WSA 31

Mexican Steel Demand The Mexican steel production remained relatively flat between 2004 and 2008 (0.7% CAGR 04-10). However, since 2010 production has increased significantly (5.2% CAGR 10-12) and reached its peak last year, amounting to 18.5Mt. Moreover, long steel production grew 8.7% CAGR 10-12 to 7.7Mt last year and flat steel production posted 3.1% CAGR 10-12 to 8.0Mt in 2012. Steel demand in the Region showed gradual recovery from 2009 and reached 19.3Mt in 2012 (6.7% CAGR 10-12), in line with strong local GDP increase in the same period. Based on Credit Suisse's Economics team estimates for Mexican GDP of 3.4% for 2014 and our demand forecast model for local apparent steel consumption, we estimate that steel demand in Mexico could potentially increase 5-6% in 2014. Mexico: Growth in Steel Production, Sales and GDP (y/y %) Mexico: Steel Demand Model Correlation to Real GDP 25% 20% 15% 10% 5% 0% -5% -10% GDP Steel Production Steel Demand 8% 6% 4% 2% 0% -2% R² = 0.88-15% -20% -25% 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E -4% X Axis: Mexican Steel Demand Y Axis: Mexican Real GDP -6% -30% -20% -10% 0% 10% 20% 30% Source: WSA, Alacero, Credit Suisse Research 32

Mexican Automotive Market The Mexican Automotive Industry accounts for ~20% of the Manufacturing sector and local auto-makers are well established in the American market. As a result of economical growth and car financing boosting domestic markets and the combination of low personnel costs, geographical location and NAFTA., national vehicle production reached 2.9mn units in 2012 (8.5% CAGR 04-12) and exports reached 2.4mn units in the same period (10% CAGR 04-12). The most relevant corporations are Volkswagen, General Motors, Nissan and Ford. Mexican Vehicle Production (Figures in mn units) 50% 2.9 2.9 2.6 23% 2.3 2.0 2.1 2.0 13% 13% 1.5 7% 1.6 2% 4% 1.5 2% 3.5 17% Mexican Vehicle Domestic Sales (Figures in mn units) 1.1 1.2 15% 1.1 1.0 9% 9% 1.0 3% 0.9 0.8 0.7-7% -5% 1.1 1.1 7% 5% -28% -29% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E Mexican Vehicle Exports (Figures in mn units) 52% 2.9 2.4 2.4 30% 2.1 1.6 1.9 1.5 1.7 19% 15% 8% 10% 5% 1.1 3% 1.2 3% 1.2-26% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2013 Main Mexican Vehicle Production By Company (Figures in '000 units) VW, 547 Toyota, 65 Nissan, 702 Chrysler, 386 Fiat, 59 Ford, 543 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E Honda, 65 GM, 649 Source: Alacero, WSA, AMIA 33

Mexican Automotive Manufacturing Plants The Mexican Automotive Industry is open to international competition and there are no signs of monopoly that could have a significant impact on price setting processes for sale. There are 18 light and heavy vehicle manufacturers in the region, which 8 compete mainly in the automotive and light vehicle markets (vans, buses and pick-ups) offering approximately 50 different models, while the remaining 10 produce principally heavy trucks. Heavy Trucks Manufacturing Plants Light Vehicles Manufacturing Plants Kenworth Mexicali Plant (Trucks and tractors) Daim ler Saltillo Plant (Chassis, foreign buses, trucks and tractors) Toyota Tijuana Plant (Employees: 689) Ford Herm osillio Plant (Employees: 1,430) Ford Chihuahua Plant (Employees:1,500) Hino Silao Plant (Trucks class 4,5&8) MAN Queretaro Plant (Chassis, foreign buses trucks and tractors) Volvo Queretaro Plant (Chassis, foreign buses trucks and tractors) Isuzu San Martin Tepetixpan Plant (Chassis and trucks class 4&6) Navistar Escobedo Plant (Chassis, foreign buses, trucks and tractors) Daim ler Garcia, NL Plant (Chassis, foreign buses, trucks and tractors) Cum m ins SLP Plant (Engines) Dina Sahagun Plant (Chassis and trucks) Daim ler Santiago Tianguistengo Plant Voskswagen - Puebla Plant (Chassis, foreign buses, trucks and tractors) (Chassis and trucks class 5) Scania Tutitlan Plant (Chassis, foreign buses, trucks and tractors) Nissam Aguascalientes Plant (Employees: 6,737) Honda El Salto Plant (Employees: 2,250) GM Silao Plant (Employees: 5,500) Chrisler Toluca Plant (Employees: 3,051) GM Toluca Plant (Employees: 2,300) Chrisler Ram os Arizpe Plant (Employees: 1,500) GM Ram os Arizpe Plant (Employees: 4,200) Chrisler Saltillo Plant (Employees: 4,390) GM SLP Plant (Employees: 2,500) VW Puebla Plant (Employees: 18,668) Nissam Civac Plant (Employees: 4,617) Source: Alacero, WSA, AMIA 34

Argentinian Steel Market The Argentinian steel industry represents 8% of LatAm s total production and is controlled by 7 corporate groups, with a total crude steel production of ~5.5Mt (2.5Mt of flat steels and 1.7Mt of long steels). Steel Production Evolution (mn. tonnes) Steel Production Breakdown (mn. tonnes) 5.1 5.4 5.6 5.5 5.6 5% 4% -2% 3% 27% 4.1 5.1 5.6 9% 5.0 5.0-11% 0% Flat Steel Long Steel 2.6 2.4 2.3 1.5 1.5 1.4 1.5 2.4 1.8 1.9 1.3 2.5 1.7 2.7 2.6 2.3 1.8 1.8 1.8-28% 0.3 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Finished Steel Trade Balance (mn. tonnes) Steel Consumption (mn. tonnes) 0.4 1.6 0.5 1.2 1.1 0.6 0.7 0.9 0.4 0.6 0.8 1.1 1.0 1.0 Imports Exports 1.1 1.1 0.8 0.8 3.4 3.5 3% 4.2 20% 4.5 4.4 7% -2% 3.4 35% 4.6 5.4 17% 4.7-13% 5 6% -23% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Alacero, WSA 35

Argentinian Steel Demand The Argentinian steel production remained relatively Stable between 2004 and 2008 (2.3% CAGR 04-10). However, since 2010 production has shown improvements (3.5% CAGR 10-12) and reached 5.5Mt last year. In addition, long steel production stood still at 1.7Mt last year and flat steel production posted volumes at 2.5Mt (0.1% CAGR 10-12). Steel demand in the Region remained flat in the last few years and reached 4.7Mt in 2012 (1.1% CAGR 10-12), as a result of lower GDP growth of 1.9%, which reflected a deceleration in the Industrial Sector, specially in the automotive and real estate sectors. According to Credit Suisse's Economics team estimates for Argentinian GDP of -0.3% for 2014 and our demand forecast model for local apparent steel consumption, we estimate that steel demand in Argentina could potentially would decrease more than 20% in 2014, however we highlight the adherence of the Argentinian model (70%) is lower than the Mexican one (88%). Argentina: Growth in Steel Production, Sales and GDP (y/y %) Argentina: Steel Demand Model Correlation to Real GDP 40% Steel Demand 40% R² = 0.70 30% 30% 20% 20% 10% GDP 10% 0% 0% -10% -20% -10% -30% Steel Production -20% X Axis: Argentinian Steel Demand Y Axis:Argentinian Real GDP -40% 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E -30% 0% 2% 4% 6% 8% 10% Source: WSA, Alacero, Credit Suisse Research 36

Import Taxes on Steel Products Brazil Argentina Mexico 1 Heavy plates 12% 12% 3% 2 Coiled plates 12% 1 12% 1 3% 3 Hot-rolled sheets 12% 12% 3% 4 Hot-rolled coils 12% 1 12% 1 3% 5 Cold-rolled sheets 12% 12% 3% 6 Cold-rolled coils 12% 12% 3% Uncoated products 7 Tinplate 12% 12% Exempt 8 Chrome-plated sheets 12% 12% Exempt 9 Hot dip galvanized sheet 12% 12% 3% 10 Electrolytic galvanized sheets 12% 12% 3% 11 Sheets coated with Aluminium-Zinc 12% 12% 3% 12 Pre-painted sheets 12% 12% 3% 13 Other sheets 12% 2 12% 2 3% 3 Coated products 14 Stainless steel sheets and coils 14% 4 14% 5 Exempt 6 15 Silicon steel sheets and coils 14% 4% Exempt 7 16 Other alloy steel sheets and coils 14% 8 14% 8 3% 9 Special-alloy products FLAT PRODUCTS 17 Bars 14% 10 14% 11 Exempt 12 18 Concrete reinforcing bars 12% 12% 3% 19 Wire rod 14% 13 14% 13 3% 14 20 Shapes, tubes and pipes 16% 15 16% 15 3% 16 21 Rails and track accessories 12% 17 12% 17 Exempt Notes 1. (10%) Having a minimum yield point of 355 MPa or more (10%) 2. (2%) 72106911 3. (Exempt) 72109000/72102001 4. (2%) 72199010 5. (2%) 72199010; (4%) 72193200/72193500 (8%) 72192100/72192200/72192300/72193100 6. (3%) 72193101/72193201/72193299/72193301/72193401/72193501/72193599/72199 099 7. (3%) 72251999 8. (2%) 72254010/72254020/72255010/72259910 9. (Exempt) 72253006/72254005/72255006 10. (12%) Other bars and rods of iron or non-alloy steel, not further worked than forged, hot-rolled, hot-drawn or hot-extruded, but including those twisted after rolling. 11. (12%) Other bars and rods of iron or non-alloy steel, not further worked than forged, hot-rolled, hot-drawn or hot-extruded, but including those twisted after rolling. (8%) Other bars and rods, not further worked than hot-rolled, hot-drawn or extruded 12. (3%) Other bars and rods of iron or non-alloy steel, not further worked than forged, hot-rolled, hot-drawn or hot-extruded, but including those twisted after rolling / Other bars and rods, not further worked than hot-rolled, hot-drawn or extruded 13. (12%) Bars and rods, hot-rolled, in irregularly wound coils, of iron or non-alloy steel. 14. (Exempt) Bars and rods, hot-rolled, in irregularly wound coils, of stainless steel 15. (2%) 72224010/73044110/73045111/73045911 (12%) 72160000 a 72169999 (14%) 72224090 (10%) 73011000 a 73019999 16. (Exempt) 72163199/72224001/73041199) (5%) 73040000 a 73049999 17. (Exempt) 73021010 Source: MDIC, AFIP, SIICEX 37