Steel Mills
US Steel Canada Musters on Through Sales Process
Written by Sandy Williams
February 9, 2016
Losses keep mounting at US Steel Canada but cash reserves are keeping the company alive for now.
In his 21st report, court Monitor Alex Morrison reported an operating loss of CAD$144 million for US Steel Canada in 2015 compared to a loss of $37.9 million in 2014. Shipments totaled 1.8 million tons, a year-over-year decrease of 22 percent.
The company ended 2015 with $151.3 million in cash, not including $44 million of raw materials that were received in December but paid for in January. Morrison says working capital has stayed relatively flat since the beginning of October 2015.
“Management has kept operations stable, while closely managing working capital levels, particularly inventories that are being matched to business conditions and reflect a seasonal build of raw material inventories to appropriate levels,” wrote Morrison.
Selling price per ton of steel was $595 per ton in December, compared to $694 per ton for full year 2015 and $763 per ton in full year 2014.
A positive note for USSC was an increase in gross margin in December to $3.5 million from a projected $1.7 million in the Independent Business Plan. Despite lower revenue from declining volume and prices, margins improved from higher than expected automotive volumes at Hamilton Works and lower operating costs at Lake Erie Works. Margins also benefited from the lower Canadian to USD exchange rate.
The sales process is in full swing with notices of the sale published in various newspapers. A list of potential bidders has been compiled and circulated to stakeholders for suggested additions. Morrison says the Financial Adviser has begun to approaching potential bidders and those who have signed nondisclosure agreements now have access to confidential data.
Non-binding letters of interest are due from potential bidders by February 29, 2016.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
Cliffs talks DOE funding, blast furnace relining schedule
The future of two projects supported in part by funding through the Department of Energy remains uncertain.
Cleveland-Cliffs open to asset sales
Meanwhile, its Canadian operations have been hurt by the broader tariffs proposed by the United States.
As Q1 loss balloons, Cliffs pledges to cut costs, streamline operations
Cleveland-Cliffs Inc. gushed red ink in the first quarter, and pledged to stem the bleeding by idling inefficient, “loss-making operations” and increasing focus on its core automotive business.
Cliffs plans to idle three mills, cut 950 jobs on ‘insufficient demand and pricing’
Cleveland-Cliffs plans to indefinitely idle its steel mill in Riverdale, Ill., as well as mills in Conshohocken, Pa., and Steelton, Pa. The Cleveland-based steelmaker said all three facilities would be idled on or around June 30. Approximately 950 jobs will be impacted, the company said.
CRU: Usiminas may reduce capex unless government strengthens protection
“The lack of effective measures to create fair competition, amid a surge in subsidized imports, is the main threat to the sustainability of Brazil’s steel industry and its value chain,” CEO Marcelo Chara said.