Steel Mills
Low Steel Prices Result in January Loss for US Steel Canada
Written by Sandy Williams
March 14, 2016
US Steel Canada continues to lose money due to low steel prices said Court Monitor Alex Morrison in the 22nd monitor’s report.
January steel shipments at the CCAA protected steel mill increased by 9 percent to 150,878 tons. Revenue was *$79.0 million resulting in an average selling price per ton of $524. Selling price was significantly lower than the average price of $811 per ton in January 2015 and $694 per ton for the full year 2015. Lower pricing, wrote Morrison, was due to broad decline in sales prices in North America as well as a change in sales mix from lost automotive sales.
EBITDA for January was negative $11.9 million due primarily to the decline in selling prices. EBITDA was also impacted by the value of raw materials that were purchased at higher prices before the Great Lakes shipping season ended. Cost of sales and gross margin will continue to be impacted, wrote Morrison, until new raw materials are purchased at lower current market prices.
Net cash flow for January was negative $41.7 million after paying for ore and coal shipments in December and January. Cash at the end of January totaled $109.6 million.
A revised forecast for the eight week period ending April 29, 2016 estimates receipts of $205.1 million and disbursements of $195.6 million that will result in a cash position of $124.6 million at the end of April.
The sale of US Steel Canada continues with the first phase completed on February 29. Letters of Intent are currently being reviewed and shared with key stakeholders. The second phase will include selected bidders meeting with management and touring the USSC mills.
*Dollar amounts in Canadian currency.
Sandy Williams
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