You are Lucía Ferreyra, VP of Strategy at Aceros del Plata, an electric-arc steel mini-mill in Campana, Buenos Aires province. The mill is running at 92% of capacity and the board wants your recommendation on a US$140 million expansion within thirty days. Before anyone talks about building, you have to tell the board where the market stands in its cycle.
The situation
Aceros del Plata turns scrap into rebar, wire rod and merchant bars for Argentine construction: one electric-arc furnace, two rolling lines, 600,000 tonnes of nameplate capacity, 1,150 people and about 22% of the domestic market, behind an incumbent with roughly 45%. In 2025 it sold about US$450 million at a 16% EBITDA margin, with net debt of 1.4 times EBITDA.
Two years of strong demand and a steadier peso have pushed utilization from its usual 78% to 92%. Order books are full, the incumbent has announced its own expansion, and the board reads the numbers as a mandate to grow: its draft already says yes, in full, this quarter.
Your market-intelligence team reads the same months differently. Cement dispatches have fallen for two quarters, mortgage approvals are softening, the central bank is tightening and the sovereign spread widened 250 basis points in a single month. Argentine construction downturns have typically cut long-steel volume by 20 to 30% within a year; the worst on record cut it 35%.
The expansion — a third rolling line plus a furnace upgrade, 40% more capacity — would take 24 months to commission. Funded with dollar debt, it would take leverage to about 3.4 times today's EBITDA, against a bank covenant of 3.5 times. The supplier holds its price and delivery slot for 45 days.