Loss Deepens for U.S. Steel in Q2

Second-quarter flat roll results were affected by pandemic-related closures at OEMs as well as low demand from the energy end-markets. A number of U.S. Steel blast furnaces were idled indefinitely during the second quarter and have yet to be restarted. In December, the company announced the idling of Great Lakes Works ironmaking, steelmaking and the hot strip rolling mill facilities. Recently, it informed the Michigan Department of Labor of plans to indefinitely reduce operations of the pickle line, cold mill and finishing division at the Ecorse facilities.

The Tubular division continues to face challenging market conditions due to declining rig counts and low oil prices. As a result, U.S. Steel has indefinitely idled its Lorain and Lone Star facilities, consolidating tubular production at Fairfield.

U.S. Steel continues to pursue its “best of both” strategy and anticipates completion and start-up of its Fairfield EAF in the second half of the year. Acquisition of the remainder of Big River Steel remains the company’s top strategic priority, executives said.

Cowen Insights reports that permanent cuts may be coming to Granite City as well. Cowen commented, “X bought out POSCO’s JV interest in 1Q20 for $3M. We believe this could also signal X is moving forward with actions to permanently curtail all or a portion of its Granite City sheet making operations (2.5M-3M tons of sheet making capacity) which currently supply HRC substrate to UPI (and at a high cost given elevated freight to transport through the Rockies). In March, X temporarily idled one of the two blast furnaces on site in response to weak market conditions. Recall, X foreshadowed an eventual shutdown of its Granite City sheet making operations following the acquisition of a 49.9 percent stake in Big River.”