US flat steel demand healthy in Q1, virus outlook uncertain: US Steel

Demand for flat-rolled steel products in the US has been healthy throughout the first quarter of 2020, however the impact of the ongoing coronavirus pandemic on the rest of the year is unknown given the rapidly evolving situation, US Steel said Friday.

US Steel expects to report an adjusted loss of 8 cents per diluted share in the first quarter of 2020, it said in its first quarter guidance issued Friday. This compares with earnings of 31 cents per diluted share, or $54 million, on sales of $3.5 billion in the year-ago quarter.

Results for the company’s flat-rolled segment are expected to be better than anticipated in Q1 as seasonally strong shipment volumes more than offset the typical seasonality of mining, US Steel said.

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“Additionally, the domestic flat-rolled steel market has remained healthy throughout the first quarter to date,” the company said. “Extended lead times are supported by robust construction end-market demand and an end to destocking that negatively impacted order rates throughout 2019.”

In April the company will commence the previously announced indefinite idling of its iron and steel making operations at its Great Lakes Works outside Detroit and still expects to begin a scheduled 48-day outage at its Gary Works blast furnace No.4 in April.

Steel selling prices in Europe steadily increased throughout Q1, however US Steel said its business was still impacted by the flow through of lower pricing based on monthly and quarterly contracts and elevated raw material costs.

Additionally, the company’s tubular steel segment remained challenged in Q1 as oil prices remain under significant pressure and rig counts continue to be low, US Steel said.

“The global coronavirus outbreak is an unprecedented and rapidly evolving situation,” US Steel said. “It remains uncertain how long the situation will last and what the impacts will be for the full year. Given the significant uncertainty in the marketplace, we continue to monitor demand levels and plan to provide more information during our first quarter earnings call.”
Source: Platts