Techint’s Paolo Rocca bets on Milei’s US ties amid a global steel clash

Those familiar with the business of Argentine multinational Techint claim that the firm’s steel is not just at the heart of its operations – they believe it is largely responsible for the power the company has in the world. Techint sits in an exclusive club of 30 companies which produce the most steel on the planet. Even though he was one of the first to put faith in Vaca Muerta’s non-conventional gas from Fortín de Piedra, nearly 85 percent of Techint owner Paolo Rocca’s business comes from steel production. And there is nobody who can convince the Italo-Argentine tycoon to abandon that position and give in to China in an ongoing trade war.

It remains to be seen how 2025 closed out for Rocca, but the numbers from the third-quarter of last year for Ternium Argentina, Techint’s flat and long steel division, do not look good at all. Even though production grew by 14 percent, there was a strong negative impact from a US$118.4-billion deferred tax charge. This was because the depreciation of the peso overcame the adjustment for tax inflation, affecting the net profit and loss in the books. This implies that the inflationary drop in pesos of macroeconomic stability did not allow Rocca to dodge the foreign exchange lag and its consequences for costs.

Hence one of the knots of tension Rocca holds with the libertarian government’s plan. Economy Minister Luis Caputo’s management team took it upon itself to demonise national production as responsible for inflation and sought leverage in imports to tame prices in pesos, even at the expense of destroying jobs, downsizing or closing factories and weakening the local value chain to the max. Yet the steel multinational is not acting up over free trade – rather it hates the double standard used by the government to align itself with the United States’ political discourse while adopting trade pragmatism with China at the same time.

The change in Argentina’s economic model had a background to it: Mauricio Macri’s 2015-2019 administration rocked national industry by allowing growth in the imported share of the value chain of nationwide factories. Add in the presence of Chinese products as an outstanding factor. Argentina’s lack of dollars and a political crisis put that process on standby. Since the arrival of President Javier Milei in power in December 2023, the de-industrialisation plan took force. It has managed to divide the local establishment, which in general backed macro stabilisation and embraced libertarian ideas but saw its business negatively affected nonetheless.

Those close to Rocca say there is a line Milei has to respect in order as not to push the billionaire into the business opposition: the President must curb the flight of dollars generated by the country, in an alliance with Donald Trump’s administration, strangling imports from the Asian giant to the max.

“What we’re seeing in trade reactions is not a small quota or dumping: we’re seeing 50 or 100 percent tariff rates, which we hadn’t seen since 1960. It started in the United States, then it went on to Canada and Mexico,” said Ternium Argentina president Martín Berardi, who is almost Rocca’s confessor, recently.

One of the points which could mark a breaking-point with the libertarian entourage would be the bidding for pipes to connect Vaca Muerta with San Matías Gulf, in order to export Liquefied Natural Gas (LNG) via vessels. The San Matías Pipeline, the Single Project Vehicle (VPU in Spanish), which presented to the RIGI incentive scheme for major Investments the project to purchase the 480 kilometres of pipes for the gas pipeline, has already opened tender envelopes. The successful bidder will be revealed in days to come.

The gap with local business became noticeable: Rocca pushed for production to go nationwide and to be able to sustain the local value chain supplying the company SIAT (owned by Techint), even to keep the factory in Lanús, a flagship of the Argentine multinational, alive. Yet the pool of companies under the umbrella of Southern Energy (SESA) hopes to gain in competitiveness at the lowest possible cost, in order to deal with unstable market, in terms of prices. Early rumours point to China or India taking over production.

The threat of closing SIAT, a rumour they had let slip from the company, is in fact not Rocca’s most important card. All eyes are on the trade agreement that Milei’s Argentina wishes to sign with Trump’s United States, which should see Chinese presence diluted every day to prevent the flight of dollars towards the Asian giant. The Techint Group has aligned itself decisively with the West in the global trade war and the US President’s actions consolidated its anti-Chinese discourse.

“Nobody speaks of not competing with the world. Local suppliers have always competed with international ones in the supply chain, and that’s why they have high cost and production demands. But China is another story because the goal of that country’s companies is to inundate the world with steel, leveraged by the state, and thus score a win in the trade war. That’s illegal in capitalism,” said a company source close to the top brass.

Rocca has stopped talking with Milei directly, almost since the start of his administration. He has praised him in public and continues to be appreciative of the macroeconomic stability and the freedom for companies to operate. It is clear that Rocca is more comfortable in this political process than with Kirchnerism. 

Yet he was also the only businessman from the big leagues who has demanded an industrial plan from the government, even knowing no such plan will arrive. A patient man, like the Chinese, Rocca – the bigwig of Argentine industry – will wait and see whether the setting moves logically, in terms of global alliances, and reinforces his ruling party stance. If the Chinese option progresses, then he may move to the other side.

The carrot of employment reform or the winks benefitting Tecpetrol, Techint’s energy company, in Vaca Muerta will not suffice to sway one of the most powerful men in Argentina. Rocca, in addition to carrying out very profitable business, is a specialist in talking to political power. Macri attempted to convince him to leave the steel business in Chinese hands and to concentrate all his investments into Vaca Muerta. It is clear the former president did not succeed.