Sebastian Marti - IR Director Daniel Novegil - CEO Pablo Brizzio - CFO.

Thiago Lofiego - Bradesco Leonardo Correa - BTG John Brandt - HSBC Alfonso Salazar - Scotiabank Marcos Assumpcao - Itau.

Good morning, my name is Kellie and I will be your conference operator today. At this time I would like to welcome everyone to the Ternium third-quarter 2016 results conference Call. [Operator Instructions] And I will now turn the call over to Sebastian Marti, you may begin your conference..

Good morning, and thank you for joining us today. My name is Sebastian Marti, and I am Ternium's Investor Relations Director. Ternium issued a press release earlier today detailing its results for the third-quarter 2016. 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 on page 2 in today's webcast presentation. With that, I'll turn the call over to Mr. Novegil..

Thank you, Sebastian. Good morning to everybody and thank you very much for participating and for joining today in this Ternium's conference call. Well today I will like to share with you my views on the current state of the steel markets that are relevant to Ternium and also some expectations for the near future.

And afterwards I will ask Pablo to review our results for the third quarter of the year that as you know have been quite satisfactory so to speak. And then we will have a Q&A session that I would be looking forward to answer your questions and your concerns.

Just before starting let me just mention a couple of things about our performance so far in the first nine months of the year. We shipped 7.4 million tons of steel products. Our EBITDA was $1.2 billion accumulated in this nine months with an EBITDA margin of 22% per ton and $162 per ton.

So that in this quarter the Ternium net income reached $562 million or 27% of EBITDA ratio. At the same time earnings per share were $2.43 as you know.

On the cash flow side, we have also been doing pretty well in this quarter and at the end the Ternium's free cash flow during the first nine months of 2016 reached $487 million, almost $500 million after a CapEx of $335 million.

On the other part of the coin, the Company net debt to EBITDA ratio is now just 0.7 times, that is quite low and healthy and the net debt being a little bit below the $1.1 billion net debt. Even when we look at some more the inventories levels than the technical needed mainly because of a strategic results in the slab part of our business.

As always, we are going to continue working hard to deliver the best possible performance to our shareholders and I guess and I do believe that we are reaching the target and the objectives and the aims that we discussed with you during our Investor Day and that were fixed for the 2016 and 2017.

So we are going through a path of increasing performance and gaining productivity and competitiveness and this is been reflected in the bottom line of the Ternium results. Let's pay a very quick review or a very quick look on the current market situation impacting the activity of Ternium.

As you know that steel prices in the US domestic market bottom out after several months of significant decrease and I do believe that these prices will go up in the short run. Internationally steel prices has been increasing.

The ones of domestic prices in Europe as well as in China are reducing the gap vis-a-vis the US domestic prices in part supported by increases in raw material prices, some of which have been very relevant, as in the case of coking coal and iron ore or zinc.

At the same time I do believe that the scrap prices are also expected to go up in the short term, impacting the cost base of those that are intensive in the use of scrap at their minimills technology.

On the other part, on the demand side the steel end user demand remains steady in the US as well as in Mexico although as we are approaching the weaker part of the year on a seasonally basis customers were cautious regarding increasing inventories in the region.

But if the pricing trend change this cautiousness will reverse, maybe they will be in a position where they need to rebuild, inventories will increase the upper-end demand of steel in the US as well as in Mexico.

In Mexico, the automotive and household appliance industry are steady, are doing very well while construction business is weak as public and private activity in this field are somehow affected by lower infrastructure spending and a deceleration of growth in this markets of public and private activity.

Not in the industrial sector, where as I said before, the activity is doing very well, automotive as well as home appliances and industrial applications.

If we pay a look and we turn to Argentina, the country continues to go through a transition in 2016 after the last presidential election and our expectations are that it will resume a growth path in 2017. The government is doing what it has to be done and no doubt that it will pay and the economy will recover and will rebound in 2017.

As anticipated, we had a weak third quarter in Argentina in our market, although I do believe that the slowdown is behind us and that we are going to see progress in the steel demand from now on. The automotive industry in Argentina has been able to increase domestic sales that are quite strong during the last few months.

Although exports to Brazil are not increasing yet, this could be an upside for the Argentine automotive industry. The Brazilian economy is, in some cases, bottoming out as it seems to be doing right now.

So at the end and for this introduction and summarizing I could say Ternium's results have been very good so far in the year and have been very good especially in this quarter and we are going to be able to show a very good 2016 as a whole.

Prices in North America have bottomed out and there is a good fundamental base for them to go up and to increase in the months to come. Our main market in Mexico is having healthy end-user demand especially in the industrial sector, as I mentioned before, although we are heading now into a year's end seasonality kind of effect.

And finally in the demand side in Argentina, our second largest market, is going to begin giving us better news in the quarters to come and some healthy recovery news are coming from our customers base. Well, at this point I would like to pass to Pablo and to go ahead with your comments about the performance of Ternium in the third quarter.

Please, Pablo, go ahead please..

Thanks, Daniel. Good morning to everybody and thank you again for participating in this call. Let's begin on page 3 of the webcast presentation. As you may have seen in our press release issued earlier today, the third quarter results were very strong. EBITDA in the third quarter reached $502 million.

This was 28% higher than EBITDA in the second quarter and two times EBITDA in the same quarter last year. The chart on the upper-left-side shows that EBITDA has been improving consistently over the last 12 months.

A substantially lower cost of raw material, purchased slabs, and other inputs gradually went through our inventories and the steel price environment improved during the third half of 2016. In this same line EBITDA margin continues to increase, reaching 27% in the third quarter or an EBITDA per ton of $214.

In the fourth quarter this year we show a change in these tendencies as it will reflect with some lag related to investor customer contract prices, the downturn in steel prices in North America that occurred after June 2016 and the increase in purchased slab prices by the end of the first half [ph] of the year.

In the third quarter 2016 we had a net income of $264 million, equivalent to earnings per ADS of $1.17, a $0.39 sequential increase. In the following page we can zoom into the Mexican market where sales remain relatively stable in the third quarter as a result of a 13% sequential decrease in shipment offset by a 13% increase in revenue per ton.

After increasing 10% between the first and the second quarter of the year, shipments in Mexico were at 225,000 tons lower in the third quarter affected by restocking in the commercial market over the past few months, as well as by third quarter seasonality in the automotive industry.

We do not expect shipment in the Mexican market to change substantially in the fourth quarter as this market has a seasonality effect entering into December of the year. In addition, as I mentioned earlier, we expect average realized price in the fourth quarter will begin to reflect the significant decrease in steel prices over the past few months.

With the usual lag effect of regular prices reset contained in industrial customer sales contract, which in average reset prices every three months. Let's review now the Southern region market performance on page 5. In this market, net sales were stable in the quarter with only 2% decrease in shipment offset by a 3% increase in revenue per ton.

As Daniel mentioned, after a transition period in 2016, we lead this market bottom out in the third quarter of the year and should begin to recover in the fourth quarter to return to growth in the next year - or during next year.

On the next page you can see the combined effect of this development from our consolidated sales, a 10% decrease were offset by an 11% increase in revenue per ton.

In the third quarter of the year Mexico accounting for 65% of total shipments; the Southern region 23% and the other market, mainly Colombia, the U.S., and Central America, accounting for the remaining 12%. Let's review now the causes of the sequential improvement in EBITDA on page 7.

The main driver of the increase was a better steel price, which as we saw increased in our main market with more strength in Mexico. EBITDA per ton increased as the better steel price was [indiscernible] partially offset by slight increase in operating cost per ton. And we have also the effect of sequential lower shipment volumes.

We expect to have sequentially higher cost per ton in the fourth quarter as it will be affected by the pass through of higher slab market prices, which increased the current level at the end of the first quarter of the year - during the first half of the year - and it did not impact the cost of sales in the third quarter as a result of a first-in first-out accounting.

On page 8 we see the same chart on the nine-month basis. In this year-over-year comparison you can see that EBITDA reached $1.2 billion in the first nine months as EBITDA per ton increased $406 per ton in 2015 to $162 [ph] mainly reflected substantially lower operating cost of ton partially offset by $100 decrease in revenue per ton.

The decrease in operating cost per ton was mainly due to a lower cost of purchased slabs, raw material, energy and labor. Please turn now to the following page. You see a chart showing the drivers of the sequential increase in net income in the third quarter of this year.

As you can see here, improvement was mainly the result of higher operating income, slightly offset by higher net financial expenses and lower gains from not-consolidated companies. The nine-month view in the next page show also operating income as the main driver behind the year-over-year increase to $562 million net income.

We expect a result from non-consolidated companies mainly Usiminas and lower net financial expenses partially offset by, of course, a consequentially higher income tax expenses. Let's now review the free cash flow generated in the quarter on page 11. Working capital increased by $210 million and CapEx was $105 million.

This took us to a free cash flow generation of $115 million in this quarter. The increase in working capital was mainly related to an increase in the average cost of steel as a result of a more expensive slabs flowing through inventories.

Also there was a planned increase in the volume of semi-finished and finished steel [indiscernible] inventories at the end of September.

On the following page we can see that in the first nine months of the year Ternium generated free cash flow of $486 million with $335 million in CapEx and $153 million increase in working capital, mainly as we commented, was the increase as of September of the year.

Finally, in the last page of this presentation you can see the evolution of Ternium's quarterly cash flow from operations, CapEx and free cash flow. We continue to show pretty consistent cash generations over the quarter and stable CapEx.

At the same time the Company's net debt to EBITDA ratio continues to improve as it was only 0.7 times to last 12 month EBITDA at the end of September.

Though it's not apparent in the graph due to rounding, Ternium's net debt continues decreasing in the third quarter, reaching $1.05 million at the end of September, a quarterly reduction of $92 million. So, these are the remarks and the main issues I wanted to comment with you. So, please operator, we can proceed with the Q&A session. Thanks..

[Operator Instructions] Your first question comes from the line of Thiago Lofiego from Bradesco. Your line is open..

Congratulations on the results. I have two questions, one, could you comment on your view on what's the normalized EBITDA percent level for Ternium? Maybe if you could give us a range that would be very, very helpful.

And second question your - just wanted to touch on your strategic rationale regarding your short slab position in Mexico, do you intend to close this gap or are you comfortable on buying slabs in the market? And also if you guys could comment on how important do you think CSA could be to Usiminas in Brazil going forward or maybe if even could talk about Usiminas own - I know short slab position at this point, how do you think that should evolve going forward?.

I will take the first part of your question and Daniel will follow with the other part. As a Company Ternium has always been working to try to generate an EBITDA margin of over 15%, and as you can see in the history of this Company especially in the last 5 years, we were able to sustain this level of EBITDA generation.

Especially in this year we were able to reach a level of around, higher than 20%, which we are expected to close the year at this level.

Of course, we cannot tell you that the level that we reach in the third quarter is the level that the Company will have because we have some clear issues that reflect on these specific gains, but we were able to move in an upper side of the range that we always comment as being between 15% and 20% EBITDA margin generation.

So we believe that we'll continue to be able to sustain within this range and always - and as we always do trying to reach the upper side of this range and trying to sustain, we are working very hard in doing that and fortunate to us the results are reflecting that. So Daniel, please, if you would like to take the second part of Thiago's question..

Yes, well, first Thiago thank you for your initial comment and let me go direct to the second part of your question, just adding that I do firmly believe that Ternium has fundamentals to produce results above our peers because we do have a better industrial base, we do have more flexibility and we do have superior performance and productivity.

So at the end you will continue seeing Ternium outperforming our peers. I do firmly believe that. And we are doing our best in order always do a breakthrough and to initiate new ideas, innovations in order to improve our productivity to increase performance.

Regarding your question on slabs, you know that in many occasions we had a chance of talking and changing ideas with all of you regarding our position in Mexico, we had the former facility of Insa [ph] in Monterrey that is increasing production and you know is demanding more and more slabs.

Up to the moment we were able to supply these slabs from an interesting for us oversupply of slabs worldwide. So that together with the Russian and the Ukrainian supply plus the increasing Brazilian supply and the metal supply in Mexico we were able to properly and correctly serve our needs of slabs.

You have to take into consideration that on the supply side of the slabs we are enjoying now a situation where in Brazil it happened to be an important increase in capacity and in production of slabs.

CSA is running at almost full capacity and also CSB is started operation and doing very well and having excess capacity to be sold in the international market being Ternium maybe the main customer for CSB because of location, because of logistics, because of fitness and because of product range and so on and so forth.

But having said that, obviously we are always in the process of analyzing ways of vertical integration because we're also having plans to expand our product base and our customer base and our production base mainly in Mexico where we do have opportunities to grow based upon the growth of the market on one hand and based upon the share of imports coming from overseas that represents almost 27%, 28% of the Mexican market and these gives us an interesting room to increase market share and to increase production service in our customers from our Mexican facilities.

Having said that and regarding CSA I - and to answer your question, at this time we do not have anything to report regarding CSA, CSA as we talked in some Investor Day and some other calls it has fit with the Ternium facilities and in fact we're buying slabs from them.

And some time ago, if you remember, we participated among other companies in the process of the possible sale of CSA, although we didn't find a common grounds at that time. We have analyzed sometimes in the past opportunity to integrate our operations with more slab-making capacity and we will continue doing so.

And when we see opportunities that could make sense for Ternium we will analyze and we will see what we can do..

Your next question comes from the line of Leonardo Correa from BTG. Your line is open..

Starting out just a quick question on where you are seeing the current HRC in slab spread, please? And maybe if you can give us some expectations for the fourth quarter? And just moving on, Daniel, just to some of the issues that you just talked about maybe if I can expand a little bit on the question; in terms of from what you are saying, I mean, in terms of integration, you basically have two options right; M&A or building a new greenfield project in - which historically, would probably be in Mexico, as you have been mentioning.

Is there any - that you can mention now - is there any preferred routes in terms of how you would think of integration, I mean from M&A opportunities in the market I would imagine that there would be a deep discount to replacement values.

So I just wanted to get your sense on whether it really would make more sense going for M&A in the current environment.

And finally on Usiminas still, would a potential deal with CSA would that be something conditional upon Usiminas being sorted out, how are you seeing Usiminas maybe 5 years down, I mean it's - clearly there has been little progress from a shareholder perspective in terms of understanding.

So just wanted to get your sense on how you view the asset going forward and potentially even spinning up the asset into a - how would that be considered in this new environment. So if you can maybe link the issue on CSA and Usiminas that would be great. Thank you..

Thank you. First in the buying or building issue that you are raising because at the end your question, it has be directed to a specific areas of Turnium production. For example no doubt that the market value of a steel facility, integrated facilities or areas where there are - there is overcapacity will go idle.

No doubt that buying is better than building because the opportunity to buy is well below the building cost, the building marginal cost. But at the same time, you have selective kind of building of specific parts of the process that can make sense for some market.

Example Tenegal [ph] where you need to build because there is not capacity to be sold in the market, that all the capacity is being run at full because of the market growth and because of the specific products and because of specialization, differentiation, market proximity, relationship with customers and so on.

So, the building and buying the debate and the building and buying dilemma depends on some parts of the technology in the industry as well as circumstances and characteristics of each one of the markets.

We are going to be very cautious when analyzing values to invest on either buying or building because we will go for profitability in this investment and we will always have this first in our mind in order to take any decision.

In the supply of slabs, as I mentioned before in some point of time we have been analyzing in the past and we continue analyzing choices and alternatives in order to integrate our sales especially taking into consideration that our intention is to grow especially taking advantage of the room that we have in the Mexican market coming from the growth of the market as well as the imports coming from abroad, as I mentioned before, in the Thiago question, and so it depends, it depends.

Then regarding the case of Usiminas, it is a long story to tell short, maybe we will have the chance of talking more in detail when we get together in the Investor Day or even before. But let me make you some brief comments.

First of all we have a negative ruling from the court two weeks ago, no doubt and it is obvious that we do respect the justice decision even when we are not happy with the decision that is putting back the former interim CEO in place.

We do believe that the former CEO, Sergio Leite, is the best CEO for Usiminas at this time, he is independent, he is knowledgeable, he has expertise, he is an experienced person and he is very well recognized and respected in Brazil.

He has been elected by an ample majority workers including and so that I take advantage of your question to deliver a recognition to Sergio Leite's performance. He did a very good job under very difficult circumstances of the company and all his decisions and his actions are delivering good results.

And he was able to pass these decisions properly in a difficult environment. Second, we will continue the process in the justice going through all instances to confirm the legitimacy of the board of directors' decision in broad majority that put Sergio Leite in place three months ago.

Because we do believe that the decision had been correct, the decision being taken by the board, that being correct, and we will follow this in the justice and we will go to all the options that we have over there.

Third, at the same time, it is obvious that as we have been talking in some other occasions that we will have and we will do our best to find a suitable negotiated solution with Nippon Steel through a dialog and through exchange of opinions on the governance issue.

And we will not stop in this effort to better relate with our partner and to find ways of finding a solution to the problem.

So, that's where we are, in other words we respect the decision of the justice, we have recognition for Sergio Leite, that did very well and it was showing the results of the company, we will follow in the justice using all what we can use in order to continue the process.

And for no doubt that we have to continue talking with Nippon Steel to find a proper solution to the governor's problem. Pablo, I would like to pass to you because maybe you have some comments in the first part of the question, especially..

Okay, yes I will. I don't want to forget the first part of Leonardo's question, which was related to the slab pricing and the HRC pricing and the gap between these two products. We have seen historically a level of gap between the two prices of around $150 per ton.

What we have seen lately is a decrease as you know in the price of HRC in the US and not that significant decrease in the price of slab. So, the gap between two products has been coming back to historical levels or even higher levels than we used to see.

So, we continue to see a very, very healthy level of gap between these two products and as we already discussed and as Daniel mentioned, we are expecting to see some price increases in the US market that will help sustaining this very healthy level of gap between these two products.

So, we are confident to keep seeing and to keep taking advantage of the gap that we have seen historically, of course, the gap has increased during some quarters, but now are returning to still very good levels of difference..

Yes, perfect.

So, just to clarify Pablo, you are saying that even after the correction of HRC prices in the US, you still see an HRC to slab spread above $150?.

Yes, that's what I am trying to say..

Your next question comes from the line of John Brandt from HSBC. Your line is open..

Good morning, gentlemen. Congratulations on the results and thanks for the call. My first question relates to demand and the outlook for 2017, we have seen Mexico grow year-to-date volumes by about 8%, but was flat in the third quarter and you did mention that there were some commercial market destocking.

I am wondering how much of an impact that had on the results and if that sort of destocking below where they should be and if we should expect some restocking in 2017 and then if we should expect Mexican volume growth to be at sort of similar levels to 2017, say high single digits? And in Argentina you mentioned you do expect a pickup in demand in 2017.

Acknowledging that it's very difficult to predict exactly when and by how much, I am wondering what your expectations are should we expect a sharp increase or a more gradual increase, should it be the beginning of 2017 or later in 2017? I guess that's my first question.

And secondly, I also wanted to ask about working capital, there was significant outflow and it seems like part of this was strategic, I believe you said that there was some excess slab inventory, I am wondering is that because you see slab prices increasing or is it something else, is it truly related to the higher costs and if we should expect to see working capital at this level or if you would expect that to reverse somewhat in the coming quarters? Thank you..

Well, let's start by Mexico.

Mexico as I was mentioning is doing very well in the industrial consumption so to speak, that means that home appliances, automotive industry and industrial applications are doing very well and will continue doing very well in the years to come because more plants are moving to Mexico to produce and Mexico is very competitive and very productive to produce industrial applications, first.

Second, there is a kind of a slowdown so to speak in the demand coming from the construction business, either from private or public.

The reason for that is first, as you know, it happened a devaluation, important devaluation in the currency, in the domestic currency against the dollar, second, the interest rates were fluctuating and being volatile in the demand [indiscernible].

And so this affected expectations in the customers' side and coupled with a kind of delay in public works meant that the construction part of our demand was a little bit weak. But I do not see any important change in the deliveries of Mexico in the months to come.

To be honest I continue viewing the market very strong and all in all I do believe that the market will continue perform very well. And the stock in hand and restocking issue is related with the pricing trend.

When the prices go down, the customers in Mexico as well as in Argentina were waiting for these process to start and so were using the inventories until the time where we could - they could buy at a better and cheaper price. And I think that they are feeling that this process is out.

And so now the demand of products will reflect both the real demand of products at the very end of the customer value chain as well as a destocking of this stock and inventories that were destroyed or were used in the last three months of the prices decline.

So in Argentina as well as in Mexico mainly we will add to the standard apparent demand we will add an additional demand coming from stocking of those inventories that have been used in the two or three years looking backwards.

In Argentina, we already are having a gradual increase in demand of around 8% to 9% to the previous levels, to the levels that we had in the first half of the year.

So that these together with a stocking issue that we have been talking before and also the decrease in inflation and the decrease in the real interest rate in Argentina following the decrease in inflation maybe it will make more attractive to our customers in Argentina to build stock instead of using stock and they go in for a very good interest rate in the financial market.

As I said also when I was commenting on Argentina, the government is doing what it has to be done is what you would do what I would do. And I do believe that if you do the right things it pays back and it will pay back and I think that this recover will go further on, especially in 2017.

But let me tell you that this recovery is already in the market place nowadays. That means in October, November and December of 2016.

Regarding the working capital question, let me quote that the reason why we are increasing a little bit the stock of slabs is not because of any speculation on pricing but because flexibility and productivity issue with analyzing our inventory level and analyzing the performance of our lines we found that having a little bit more inventory pays back in terms of flexibility, in terms of productivity, in terms of performance toward the customers and customer satisfaction.

So the reason why we increased a little bit the stock of slabs and we will continue doing that is paying back in product service, in customer service, in differentiation, in quick delivery, in just-in-time delivery, and so on. We do not see a reversal of this trend in the months to come.

But we do still have some room to decreasing inventories, in material in process, in finished product, in low-movement kind of material, so that the process of reducing the net debt except for this part of the slabs will continue.

And we do have on top of the cash generation of the Company and a low CapEx program looking ahead, you will see in the quarters to come maybe an improvement, a further improvement in the net debt of Ternium.

Pablo would you quote on that please?.

Of course Daniel, just a couple of things to add to your comment. We have increased the working capital mainly because of the reason that Daniel has been commenting and also because of the general increase during the first part of the year of prices in every raw material that we have an inventory of finished and semi-finished products.

So the level of inventory has already increased. As Daniel was mentioning, we will - we are expecting to increase the level of working capital that we have up to now. So we will continue with the policy that Daniel described but this doesn't mean that we are expected to increase further the general level of working capital in million dollars..

Your next question comes from the line of Alfonso Salazar from Scotiabank. Your line is open..

I have two questions. The first one is regarding - well I don't know if presidential elections in the US are affecting steel demand in Mexico and in general how you are dealing with all this uncertainty that this process is creating? And the second one is regarding insecurity problems in Mexico, it's clearly increasing.

We in Mexico are very - a bit concerned about this. And just wanted to know if this is affecting your operations or if you think it can affect future steel demand as well? If you can give us some color on these two topics it would be very much appreciated. Thank you..

Okay, Alfonso, let me take this question. In fact the elections are coming due in February so we prefer not to speculate on the results of the elections.

But what we can say we have been describing that tonight both in our opening remarks by Daniel and during the questions from your colleagues, is that we continue to see a very healthy demand in the Mexican market and the decreases that we have seen lately have been related to the stocking and destocking processes when we are seeing prices moving up or down.

So we are adjusting or putting together that these two things to see how the market moves. But we are still seeing a very healthy demand on Mexico. Of course after the elections, as you will have a clear picture we can move from there. But up to now we have seen the demand related to market issues.

We continue to believe that the synergies between the two countries are great and are beneficial for both markets. In relationship to your - the second part of your question, we have not seen also an impact on the demand because on safety or security issues in Mexico.

We continue having a relationship, a very strong relationship between the real market situation on the country on the demand of our product. So that's the view that we have of the issue that we, of course, do not deny probably to Mexico but we are following the markets only and analyzing the markets only on the specific market conditions..

Your last question comes from the line of Marcos Assumpcao from Itau. Your line is open..

Hi. Good morning, everyone. Congratulations on the results.

First question on Argentina, if you could comment a little bit about import risk, the risk of import competition, how do you see that moving forward? If you could comment a little bit the price premiums how they are today and if you think that imports could be a threat when volumes recover more materially? Second question, you mentioned about the decision between buying or building, if you are analyzing the acquisition of Siderar minorities as one of growth options in the future.

And a related question to that is if you could - if dividends could increase in 2017, if your next decision on buying or building takes a little bit longer to materialize. Thank you..

Good, let me divide your question in three parts. The first one is regarding the Argentine market. We as you know following Argentina is the international domestic prices so that the prices in Argentina are similar to the prices in the US, in the Mexican domestic market, as well as in the Brazilian domestic market.

We do have a very, very high market share in Argentina. There are no important imports except for these products that we are not able to produce in Siderar.

And I think that we will continue having this support from our customers even in a more open kind of economic environment because we do have a loyalty from them and we do have very close relationships with our customers based upon electronic services and value chain integration and value chain penetration and delivering very, very high value added products.

So that our commercial base is so solid and so sophisticated that in the short run or in the medium run I don't see an important threat coming from imports from abroad except any brutal kind of dumping cases where we will go for a claim, first.

The buying and building is a dilemma, building decisions is based upon policies with countries, that means that on one side we will build the Tenigal 2 line.

On the other side we are always looking for opportunities to integrate vertically ourselves upstream, and if these opportunities arises we will analyze that very seriously even when at that time we do not anything important to report.

Regarding the buying and building dilemma, in relationship with dividends, Pablo, I would appreciate if you can quote on that because I mean that there is a quote on that that is important, in fact to pass to you, let me finish with your question on buying Siderar from the government that that would say that at the moment that is not for sale, the share of the government in Siderar that you know is 27%.

But it could be in the future, the government expressed that according with the - in view there is no need for the government to keep these shares in the companies, that may be good be convenient to pass these to the market and to the private sector. If the government moves forward, we will take this very seriously.

We will take a serious look at it, it's not the case today because we don't have any indication from the government that it will move forward in that direction in the very short run.

No doubt that as we have been talking in some of our Investor Days, it could help to simplify our corporate structure so that we will take a good look on that if it happens to be an opportunity in the medium run, I don't see this happening in the very short run..

Okay. Daniel, I don't think that there is much to add to your comment. The issue of building or buying basically was an answer to a question that one of your colleague at the beginning of the call. We don't have any specific timing of it.

As you know, we analyze very carefully and very thoroughly any opportunity that we may have and we will continue to do so. So, no specific timing for any decision. So, Daniel, if you want to close..

Well, at first I would like to thank you for participating.

We had a good result in this quarter and we feel very proud and very happy on that and we believe that this is a result of a huge effort from our people so that I would like to congratulate them using this opportunity to pass to them a congratulation because we feel very happy with the effort and everything the commitment and the compromise that they do there on a daily basis.

And again thank you for our [indiscernible] and to you for being together with us for so many years. And I wish you the best for the rest of the year and to the end of the year. A merry Christmas and a happy New Year. And I hope to meet with you again at the beginning of 2017. Good luck and happy New Year. Bye-bye now..

And there are no further questions at this time. I will turn the call over to the CEO for closing remarks..

The CEO already made the closing remark. Thanks. Bye-bye..

And this concludes today's conference call. You may now disconnect..