US Steel restarts depend on demand growth

Market: Coking coal, Metals
02/08/19

Integrated steelmaker US Steel said the restart of its two idled US blast furnaces depends on improvement in the company's order books in the second half of the year.

US Steel continues to monitor market conditions to determine whether it will restart two blast furnaces it idled in July at its Great Lakes Works in Michigan and Gary Works in Indiana, the company said today during its second quarter earnings call.

The two blast furnaces were idled as spot prices in the US hot-rolled coil (HRC) market fell, with the Argus weekly domestic US HRC index falling by 27pc in the second quarter to $521.75/st.

Since the end of June the Argus weekly domestic US HRC index has increased to $588/st, driven by the idled US steel capacity, renewed demand and price increases from steelmakers.

The company's second quarter flat-rolled steel production increased by 5pc year-over-year to 2.98mn st, but is down by 3pc compared to the 3.08mn st produced in the first quarter.

US Steel's raw steel capacity utilization in the US for the second quarter rose by three percentage points year-over-year to 70pc, and for the first six months of 2019 rose by five percentage points year-over-year to 72pc.

Second quarter US flat-rolled shipments increased by 8.5pc to 2.8mn st, and for the first six months of the year rose by 8pc year-over-year to 5.53mn st.

Tubular shipments declined in the second quarter, down by 3pc year-over-year to 195,000st, but were up by 5.8pc in the first six months to 402,000st.

Second quarter prices for the Pittsburgh-based company's US flat-rolled products fell by 4.9pc year-over-year to $779/st, while prices for tubular products rose by 5.2pc to $1,524/st.

The cost for US Steel's electric-arc furnace being built at its Fairfield Works in Alabama has risen to $280mn from $215mn when it was first announced in February because of the addition of an air separation unit to the project.

Shipments from US Steel's European operations in Slovakia fell by 13pc to 1mn st in the second quarter. The company announced in mid-June that it was idling its 125,000 st/month #2 blast furnace at its Slovakia facility.

Average realized prices for US Steel's European operations fell by 7.8pc to $652/st, while capacity utilization in the company's European operations fell by 13 percentage points to 92pc.

Through the first six months of 2019, shipments from US Steel's European operations fell by 9.4pc to 2.07mn st compared to the same period of 2018, while capacity utilization in the company's European operations fell by 12 percentage points to 93pc.

US Steel's second quarter profits fell by 68pc to $68mn, down from the $214mn it earned in the second quarter of 2018.

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