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Researched by Industrial Info Resources (Sugar Land, Texas)--As United States Steel Corporation (U.S. Steel) (NYSE:X) (Pittsburgh, Pennsylvania) continues to evaluate acquisition offers, the steelmaker expects to see lower capital investment in 2024 and in the future as its growth projects become operational--particularly assets at its Big River Steel operations in Osceola, Arkansas.
After receiving offers in August for the acquisition of the company's manufacturing production assets and/or the entire company, the U.S. Steel Board of Directors initiated a strategic review process. On the company's third-quarter earnings conference call on October 27, Chief Executive Officer David Burritt provided an update on the review and the "high levels of interest" from bidders: "While I can't speak to the specifics of the process, I can tell you this: there is serious interest from many highly credible bidders in the Board's competitive process." The company did not take any questions regarding the process or its participants.
U.S. Steel previously declined an offer from another major U.S. steelmaker, Cleveland-Cliffs Incorporated (NYSE:CLF) (Cleveland, Ohio). For more information, see August 17, 2023, article - New Dawn Approaching for U.S. Steel Industry after Cleveland-Cliffs Offer.
Burritt said the company is not surprised by the interest. "We've been climbing a mountain of strategic capex, and now that we're coming down the other side of the mountain, we're not surprised so many see it won't be long before these new world-class assets generate strong free cash flow."
The largest portion of that strategic capex is tied up in the construction of an additional 3 million-ton-per-year minimill at the Big River site--Big River Steel 2--which remains on track to start up in the second half of 2024. The new facility, Burritt said, will form a "cutting edge, 6 million-ton mega mill supplying the most advanced and sustainable steels in North America, with up to 70-80% fewer greenhouse gas emissions than the traditional integrated steelmaking route." He added about two-thirds of equipment is on site and construction is progressing. Big River Steel 2 is expected to reach about 25-30% of its run-rate production by the end of 2024.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can read a detailed project report.
U.S. Steel expects the addition of a galvanizing line at Big River Steel also will start up in the second half of 2024. Burritt noted the 325,000-ton-per-year line will lead to "value-added construction and appliance steels." Subscribers can click here for more information.
In September, the site's new non-grain oriented (NGO) electrical steel line addition became operational. The 200,000-ton-per-year line was built to meet growing demand from the electric vehicles (EV) market. Click here for the project report.
U.S. Steel has received its first customer orders for its NGO steels, in both the industrial and EV markets, but the company has not announced any specific customers.
Regarding future capital expenditures, Burritt said on the call he expects the completion and start-up of Big River Steel 2 will lead to a $1 billion reduction in capex in 2024 (about $1.5 billion) relative to 2023 (about $2.6 billion). The company's earnings-related presentation notes an "expected future slate" of about $600 million to $700 million in capex, after 2024.
He also noted the company is taking necessary actions "in the face of volatile market conditions." For example, on the heels of United Auto Workers (UAW) automotive plant strike, to reduce fixed costs, the company in September temporarily idled the last operating blast furnace at its Granite City Works. "With the auto workers' strike impacting the order book in the fourth quarter, we acted to ensure that our melt capacity is in line with demand. We remain nimble, enabling us to maintain profitability..."
On the conference call, Chief Financial Officer Jessica Graziano said third-quarter adjusted net earnings of $350 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $578 million both were stronger than expected.
She expects EBITDA of around $600 million in 2024, and a projected $1.3 billion in 2026, as Big River Steel hits its full run-rate.
Industrial Info is tracking 60 active projects from U.S. Steel, worth more than $6 billion. Subscribers can click here for a full list.
According to Graziano, another growth project from U.S. Steel is expected to come online in the fourth quarter: the addition of a direct reduced-grade iron pellet production line near Keewatin, Minnesota. She said equipment installation is underway and the company is "progressing negotiations for offtake agreements." The pellets will be used as feed in the production of direct reduced iron or hot briquetted iron from electric arc furnaces. Click here to read a project report.
Subscribers to Industrial Info's GMI plant and project databases can click here for a full list of detailed reports for projects mentioned in this article, and click here for related plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
After receiving offers in August for the acquisition of the company's manufacturing production assets and/or the entire company, the U.S. Steel Board of Directors initiated a strategic review process. On the company's third-quarter earnings conference call on October 27, Chief Executive Officer David Burritt provided an update on the review and the "high levels of interest" from bidders: "While I can't speak to the specifics of the process, I can tell you this: there is serious interest from many highly credible bidders in the Board's competitive process." The company did not take any questions regarding the process or its participants.
U.S. Steel previously declined an offer from another major U.S. steelmaker, Cleveland-Cliffs Incorporated (NYSE:CLF) (Cleveland, Ohio). For more information, see August 17, 2023, article - New Dawn Approaching for U.S. Steel Industry after Cleveland-Cliffs Offer.
Burritt said the company is not surprised by the interest. "We've been climbing a mountain of strategic capex, and now that we're coming down the other side of the mountain, we're not surprised so many see it won't be long before these new world-class assets generate strong free cash flow."
The largest portion of that strategic capex is tied up in the construction of an additional 3 million-ton-per-year minimill at the Big River site--Big River Steel 2--which remains on track to start up in the second half of 2024. The new facility, Burritt said, will form a "cutting edge, 6 million-ton mega mill supplying the most advanced and sustainable steels in North America, with up to 70-80% fewer greenhouse gas emissions than the traditional integrated steelmaking route." He added about two-thirds of equipment is on site and construction is progressing. Big River Steel 2 is expected to reach about 25-30% of its run-rate production by the end of 2024.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can read a detailed project report.
U.S. Steel expects the addition of a galvanizing line at Big River Steel also will start up in the second half of 2024. Burritt noted the 325,000-ton-per-year line will lead to "value-added construction and appliance steels." Subscribers can click here for more information.
In September, the site's new non-grain oriented (NGO) electrical steel line addition became operational. The 200,000-ton-per-year line was built to meet growing demand from the electric vehicles (EV) market. Click here for the project report.
U.S. Steel has received its first customer orders for its NGO steels, in both the industrial and EV markets, but the company has not announced any specific customers.
Regarding future capital expenditures, Burritt said on the call he expects the completion and start-up of Big River Steel 2 will lead to a $1 billion reduction in capex in 2024 (about $1.5 billion) relative to 2023 (about $2.6 billion). The company's earnings-related presentation notes an "expected future slate" of about $600 million to $700 million in capex, after 2024.
He also noted the company is taking necessary actions "in the face of volatile market conditions." For example, on the heels of United Auto Workers (UAW) automotive plant strike, to reduce fixed costs, the company in September temporarily idled the last operating blast furnace at its Granite City Works. "With the auto workers' strike impacting the order book in the fourth quarter, we acted to ensure that our melt capacity is in line with demand. We remain nimble, enabling us to maintain profitability..."
On the conference call, Chief Financial Officer Jessica Graziano said third-quarter adjusted net earnings of $350 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $578 million both were stronger than expected.
She expects EBITDA of around $600 million in 2024, and a projected $1.3 billion in 2026, as Big River Steel hits its full run-rate.
Industrial Info is tracking 60 active projects from U.S. Steel, worth more than $6 billion. Subscribers can click here for a full list.
According to Graziano, another growth project from U.S. Steel is expected to come online in the fourth quarter: the addition of a direct reduced-grade iron pellet production line near Keewatin, Minnesota. She said equipment installation is underway and the company is "progressing negotiations for offtake agreements." The pellets will be used as feed in the production of direct reduced iron or hot briquetted iron from electric arc furnaces. Click here to read a project report.
Subscribers to Industrial Info's GMI plant and project databases can click here for a full list of detailed reports for projects mentioned in this article, and click here for related plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
