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US Steel Sees Weakness
6/19/2020 steel expo-metal &metallurgy expo |
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United States Steel Corporation has provided second quarter 2020 guidance and an update on its latest liquidity requirements for the remainder of the year. Second quarter 2020 adjusted EBITDA is expected to be approximately (USD 315) million, which excludes approximately USD 100 million of estimated restructuring and other charges. US Steel President and Chief Executive Officer David B. Burritt said “As expected, the second quarter is being significantly impacted by the effects of COVID-19 and the expected nonrecurring costs associated with a significant portion of our steelmaking operations being idled in the quarter. As we mentioned on our first quarter earnings call, we expect the second quarter to mark the trough for the year.”
Flat-rolled segment results are expected to be significantly lower than the first quarter as the impacts from COVID-19 negatively impacted customer activity, particularly in the automotive and energy end-markets. Second quarter customer activity is expected to mark the trough for the year as demand is beginning to improve in June.
In Europe, market activity remained limited throughout much of the quarter due to a slow emergence from COVID-19 related economic shutdowns, particularly in the automotive sector. Additionally, weakness in underlying demand has also negatively impacted the segment’s performance. As a result of slow economic recovery in Europe, US Steel pulled forward a ten-day hot strip mill outage into late May 2020, originally scheduled for the third quarter. We also idled #1 blast furnace in late May to align melt with the planned hot strip mill outage. The hot strip mill and the #1 blast furnace have both been restarted, as planned.
In Tubular, market conditions remain challenged. Rig counts continue to decline, and oil prices remain at historically low levels. As a result, demand for welded and seamless pipe has significantly declined. US Steel is focused on what we can control and have indefinitely idled Lone Star and Lorain facilities and consolidated tubular production to oFairfield seamless mill. We are continuing to identify ways to cut costs within the segment, including the cost reduction expected by in-sourcing rounds production to our new electric arc furnace. The electric arc furnace is scheduled to begin production in the second half of 2020.
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