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US Steel expects to keep two US blast furnaces idled through 2020

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US Steel expects to keep two US blast furnaces idled through 2020

Highlights

Focus on preserving cash and liquidity

Furnaces have combined capacity of 2.9 million st/year

Pittsburgh — US Steel expects two of its US flat-rolled mill blast furnaces that were temporarily idled as a result of the cornoarivus to remain under temporary idle through the remainder of 2020 as the company remains focused on preserving cash and liquidity, company executives said in a conference call with industry analysts July 31.

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US Steel, which paused operations at a number of blast furnaces in Q2 in response to the pandemic, expects the No. 4 BF at the Gary Works in Indiana and BF-A at Granite City, Illinois to remain under temporary idle through year-end unless demand significantly improves. The two idled furnaces have combined annual capacity of 2.9 million st.

US Steel previously announced the restart of the No. 6 and No. 8 blast furnaces at Gary in recent weeks on increased customer demand.

"Our decision to restart blast furnaces is not speculative," said Kevin Lewis, vice president of investor relations for US Steel. "The demand we are seeing in our order book supports these restarts and is coming from fixed contracts that we have in place with customers...There is really nothing speculative about how our company has reacted to the return in demand from our customers."

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The company is taking a longer-term view in relation to the idling at its Great Lakes Works, which was announced prior to the coronavirus pandemic. US Steel has three idled blast furnaces at Great Lakes, representing 3.8 million st/year of capacity.

The company's Keetac iron ore operations in Minnesota will also remain indefinitely idled, CEO David Burritt said. Keetac can produce about 6 million st of iron ore pellets each year, according to the company.

Given the challenges presented by the coronavirus, US Steel remains focused on cost improvements and conserving cash, Burritt said, adding that the company is actively marketing non-core assets.

US Steel had $2.7 billion in total liquidity as of June 30, including $2.3 billion in cash, the company reported.

Purchasing the remaining 50.1% stake in Big River Steel continues to be US Steel's number on strategic priority, Burritt said, as the electric arc furnace mill provides for additionally flexibility in challenging demand environments.

US Steel still has more than three years to exercise its option to purchase the remaining stake of Big River, he said.

US Steel reported a net loss of $589 million on sales of $2.09 billion in the second quarter, down from net income of $68 million on sales of $3.55 billion in the year-ago period.