US Steel predicts ‘strong’ first quarter

Pittsburgh-based United States Steel Corp. has issued first quarter 2022 guidance projecting adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $1.3 billion. U.S. Steel calls that “a new all-time record for the first quarter.”

“We expect to deliver another strong quarter of safety, adjusted EBITDA, free cash flow and operational performance in the first quarter,” says David B. Burritt, the company’s president and CEO. “At the beginning of the year, we communicated expected market softness for the first quarter, along with the normal seasonal impacts related to our mining operations. We are exiting the first quarter with spot business accelerating, steel prices rising, and the longest backlog at our Big River Steel operations since October.”

In addition to the strong performance of the scrap-fed electric arc furnace (EAF) Big River Steel business unit, U.S. Steel’s sales and profitability could be abetted by the impacts of Russia’s attack on Ukraine and subsequent economic sanctions.

Burritt says, “As a result of continued execution of our differentiated commercial strategy, we are realizing significant upside on our fixed-price contracts. We expect improving market conditions to continue into the second quarter as seasonal demand picks up and buyers begin to shift their attention to a more reliable, regional steel supply given the geopolitical risks and cost volatility which has increased in recent weeks.”

He adds, “The conflict in Ukraine is a human tragedy. Safety remains our number one priority. Our employees in Slovakia remain safe and we are demonstrating our culture of caring by assisting our Ukrainian neighbors through various charitable activities. The workforce in Slovakia has been quick to address refugee needs by supplying over 7,840 meals for refugees in Slovakia, working with Ukrainian suppliers to send 17 tons of food to Ukraine, and providing 800 beds for refugees arriving in Kosice [the site of U.S. Steel’s mill in Slovakia].”

Burritt concludes, “We are actively monitoring the conflict in Ukraine for impacts and risks to our people and business. Today’s market dynamics reinforce what makes U. S. Steel’s business model unique. Our low-cost, captive iron ore assets in Minnesota are a sustainable competitive advantage that cannot be replicated by the competition. We are increasingly translating this competitive advantage to our growing fleet of electric arc furnaces. We are building a pig iron machine at Gary Works to supply Big River Steel with up to 50 percent of its ore-based metallics needs by the first half of 2023 and will continue to identify additional opportunities to broaden our metallics strategy. These actions build upon the regionally sourced, low-cost iron ore advantage our U.S. blast furnaces have and the strategy in place with Big River Steel to supplement a portion of their prime scrap needs with home scrap from our integrated operations. We remain bullish for 2022 and another strong year of financial performance.”

The company says “recent geopolitical events are increasing spot steel demand, particularly at our Big River Steel operations, resulting in a growing backlog of orders. Considering the conflict in Ukraine and its impact on the global metallics supply, our raw material inventories remain well-positioned to continue meeting customer demand and contingency plans are in place to ensure raw materials are available from alternate sources.”