Pittsburgh — Despite offering a more positive outlook for flat-rolled steel demand in 2020, US Steel expects to keep all of its idled blast furnaces offline through the reminder of the year, CEO David Burritt said Friday.
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US Steel in late 2019 announced plans to indefinitely idle the hot-end operations at its Great Lakes Works in Michigan in April. The company also last year idled a blast furnace at its Gary Works in Indiana and a furnace at its European operation in Kosice, Slovakia.
The first quarter of 2020 is expected to be the trough for the year in terms of demand and pricing, CFO Christine Breves said Friday during the Pittsburgh-based flat-rolled and tubular steel producer's fourth quarter conference call.
US Steel's mining operations are expected to face typical seasonal headwinds in Q1 due to winter weather, and steel shipments are also expected to be lower in the company's flat-rolled and European divisions on a sequential basis, Breves said.
US Steel's flat-rolled steel shipments totaled 2.52 million st in Q4, down from 2.73 million st in Q4 2018, while Q4 shipments in the European division totaled 757,000 st, down from 1.07 million st in the year-ago quarter.
Looking ahead to 2020, US Steel expects its flat-rolled steel shipments to third parties to total 10 million st for the year. The company has a 48-day outage planned at the #4 blast furnace at its Gary Works in Indiana beginning in April and will build inventory ahead of this, Breves said.
Current lead times for flat-rolled products have extended to 5.6 weeks, representing an increase of two weeks compared with the same period last year and the company's melt backlog remains healthy, pointing to stronger demand, Burritt said. He added that reported service center inventories are at the lowest level since 2014.
"We are confident in our view that the market has hit bottom," he said. "Our flat-rolled order book is healthy and customer interaction suggest demand should be solid. We are particularly optimistic about construction activity, which has shown strong demand in typically weak seasonal periods. The automotive market remains strong as inventory levels enter the year-low and recent industry publications suggest build schedules should increase in 2020."
US Steel recorded a net loss of $680 million in Q4 on sales of $2.82 billion. This compares with net income of $592 million on sales of $3.69 billion in the year-ago quarter. The most recent quarter included $567 million in restructuring charges, US Steel said. During Q4, US Steel completed its acquisition of 49.9% of electric-are furnace steelmaker Big River Steel.
Big River Steel expects their full-year 2020 depreciation and amortization expense and net interest costs to be approximately $150 million and approximately $95 million, respectively, US Steel reported.
Overall, US Steel reported a $642 million net loss for full-year 2019, down from net profit of $1.12 billion in 2018.