United States Steel Corp. (U.S. Steel), headquartered in Pittsburgh, has announced it will temporarily idle two blast furnaces in the United States and one in Europe in response to current market conditions and to align the company’s global production with demand.
In the United States, the company recently began a planned maintenance outage on the Great Lakes B2 blast furnace at its facility in River Rouge, Michigan, in early June. Because of market conditions, the company says it expects the furnace to remain idle after maintenance has been completed.
Additionally, U.S. Steel says it will temporarily idle a south blast furnace at its Gary Works, Indiana, facility.
The company says it expects to decrease monthly blast furnace production capacity by 200,000 to 225,000 tons, beginning in July, as a result of idling these two furnaces. If the downtime continues through the rest of the year, U.S. Steel says it expects to ship 11 million tons of flat-rolled steel to customers.
The company says blast furnace production at either of the plants will be restarted when market conditions improve.
In Europe, the company cites a host of challenging market conditions driven by an increase in the import of steel, higher raw material costs and slumping demand as key reasons for idling its No. 2 blast furnace at its steel mill in the Slovak Republic. The furnace has the capacity to produce 125,000 tons per month.
U.S. Steel says the furnace will resume operation when market conditions improve.
In addition to announcing these production curtailments, U.S. Steel providing earnings guidance for the second quarter of 2019. The company says it expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be approximately $250 million, which excludes roughly $15 million of estimated second-quarter impacts from the Dec. 24, 2018, fire at its Clairton coke-making facility. U.S. Steel says second-quarter 2019 adjusted diluted earnings per share will be approximately 40 cents.
Flat-rolled segment adjusted EBITDA, which the company says it expects to be higher versus the first quarter, is being negatively affected by decreasing steel prices and softening end-market demand. Additionally, second quarter shipments are lower than U.S. Steel had expected because of flooding in the southern United States, which has limited the availability of barges and its ability to ship finished product to customers over the past few weeks.
For its U.S. Steel Europe (USSE) and tubular segments, the company says it expects second-quarter 2019 adjusted EBITDA to be lower than in the first quarter of the year. In Europe, market headwinds have increased, while tubular margins are under pressure because of lower selling prices, U.S. Steel says.