Steel Mills

U.S. Steel follows Nucor, guides to lower Q4 profits

Written by Michael Cowden

U.S. Steel on Thursday afternoon said it expected lower earnings in the fourth quarter compared to the third.

The Pittsburgh-based steelmaker predicted fourth-quarter adjusted earnings before interest, income taxes, depreciation, and amortization (Ebitda) of approximately $250 million, or $0.20-$0.25 per diluted share. That’s down 56% from adjusted Ebitda of $578 million in the third quarter.

Competitor Nucor also guided toward lower fourth-quarter earnings.

U.S. Steel made little mention in its guidance of the sales process it has undertaken and that is reportedly nearing a close. Little mention, that is, except in a footnote to a table: “Excludes potential charges related to pending operational footprint actions and any potential outcome from the strategic alternatives process.”

The company said the lower guidance stemmed partly from lower shipment volumes and lower realized selling prices at its flat-rolled mills.

Recall that while spot prices soared in the fourth quarter, contract pricing typically lags spot price moves. That means contract prices in the fourth quarter reflected lower prices in the third quarter. Contract prices in the first quarter, in contrast, will reflect higher fourth-quarter spot prices.

Sales volumes fell because of because of the idling of the ‘B’ blast furnace at U.S. Steel’s Granite City Works near St. Louis. They also fell because of planned maintenance at other mills, including its Big River Steel EAF sheet mill in Arkansas, the company said.

Also weighing on results were $10 million in start-up costs for U.S. Steel’s direct-reduced grade pellet plant at its Keetac mining and processing operations on the Mesabi Iron Range in Minnesota. The company said it had already produced the first pellets from the new DR grade plant, which could be used to supply EAFs sheet mills such as Big River.

U.S. Steel president and CEO David Burritt focused on the positive, noting that the company had “successfully navigated” the United Auto Workers (UAW) union strike.

“Our diverse order book allowed us to repurpose tons impacted by the strike to other customers,” Burritt said.

“Looking ahead, domestic steel markets are improving, customer demand is growing, and spot selling prices are increasing,” he added.

Also on the automotive front, U.S. Steel has renegotiated contracts with automotive customers that feature slightly higher volumes and “better prices,” Burritt said.

Turning to operations, Burritt said that U.S. Steel’s major projects remain on track. The company in 2024 expects to complete a new, dual coating line at Big River and to finish work on Big River 2.

Recall that Big River 2 will be an upgraded the first Big River mill, which itself is one of the newest EAF sheet mills in the US. It is expected to add another three million tons annually of EAF sheet capacity to U.S. Steel’s offerings. (SMU has a complete list of new flat-rolled steel capacity here.)

Big River Steel 2 will also sport the following improvements:

  1. “Endless” casting and rolling technology – the first of its kind in North America
  2. A heavy-gauge HR pickled substrate coating line to serve emerging markets
  3. An advance high-strength steel (AHSS) CR and coating line

Michael Cowden

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