US Steel expects weak results in Q2 2020

United States Steel Corporation has provided guidance for the second quarter of 2020 and an update on its latest liquidity requirements for the rest of the year. Adjusted EBITDA in the second quarter of 2020 is expected to be approximately (US $ 315), which excludes approximately US $ 100 million from the proposed restructuring and other costs. US Steel President and Chief Executive Officer David B. Burritt said: “As expected, the second quarter will be significantly impacted by the effects of COVID-19 and the expected one-time costs associated with a significant portion of our steel operations, which will be idle this quarter. As we mentioned in our first quarter earnings report, we expect the second quarter to be the lowest for the year. ”

Results in the flat products segment are expected to be significantly lower than in the first quarter as the impact of COVID-19 negatively impacted consumer activity, especially in the automotive and energy end markets. Buyers' activity in the second quarter is expected to be the lowest for the year, as demand begins to improve in June.

In Europe, market activity remained limited for most of the quarter due to a slow exit due to economic stops associated with COVID-19, especially in the automotive sector. In addition, the weakness in underlying demand also negatively impacted the segment's performance. As a result of the slow economic recovery in Europe, US Steel has postponed a ten-day shutdown at the end of May 2020, originally planned for the third quarter. We also suspended Blast Furnace # 1 at the end of May to align the melt with the planned shutdown of the hot rolling mill. The steelmaking mill and blast furnace # 1 were restarted as planned.

At Tubular, market conditions remain challenging. The number of rigs continues to decline, while oil prices remain at historically low levels. As a result, the demand for welded and seamless pipes has dropped significantly. US Steel is focused on what we can control and indefinitely suspended production at its Lone Star and Lorain plants and consolidated pipe production for the oFairfield seamless mill. We continue to look for ways to reduce costs in this segment, including anticipated cost reductions in the production of round billets for our new electric arc furnace. The production of the electric arc furnace is scheduled to begin in the second half of 2020.