Steel Mills
U.S. Steel Offers Gloomy Guidance
Written by Sandy Williams
September 19, 2019
U.S. Steel is feeling the pain of falling steel prices and deteriorating market conditions. The company expects an earnings loss of 35 cents per diluted share for the third quarter of 2019 compared to a profit of 39 cents per share in the second quarter. The company followed Nucor and Steel Dynamics in lowering guidance for the quarter.
Declining steel prices in the second quarter and a larger than anticipated drop in scrap prices are expected to negatively impact earnings in the second half of 2019. As a result, U.S. Steel will extend the idling of two U.S. blast furnaces until at least the end of the year. The company’s U.S. flat-rolled shipments are expected to drop to 10.7 million tons.
U.S. Steel expects weakness in its Tubular segment to significantly impact earnings in the second half as negative market conditions and high import levels continue. Demand for oil country tubular goods has weakened, resulting in lower than expected shipments of 0.7 million tons, coupled with lower selling prices for seamless and welded pipe.
Market conditions in Europe continue to deteriorate as spreads between steel sales prices and raw material costs widen. The steelmaker expects shipments of approximately 3.6 million tons in 2019. U.S. Steel will not restart its idled blast furnace in Slovakia this year and plans to continue to reduce its headcount in Europe by 2,500 positions by the end of 2021. So far, 1,800 positions have been cut.
U.S. Steel expects adjusted EBITDA of approximately $115 million for Q3, which excludes a $53 million impact from restructuring charges and the December fire at the Clairton coke facility.
Sandy Williams
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