U.S. Steel's Flat-Rolled Segment on a Roll, Asset Revitalization Program to Peak Next Year

Researched by Industrial Info Resources (Sugar Land, Texas)--United States Steel Corporation (U.S. Steel) (NYSE:X) (Pittsburgh, Pennsylvania) last week reported $291 million in third-quarter 2018 net earnings, roughly double the amount reported a year earlier, on the strength of its Flat-Rolled Segment. Company officials said they expect spending on U.S. Steel's asset revitalization program to peak next year.

Industrial Info is tracking $1.72 billion worth of U.S. Steel project activity.

Click on the image at right for a graph showing U.S. Steel's North American project activity by state/province.

Chief Executive Officer David Burritt said in a press statement he expects results for the Flat-Rolled Segment to continue to improve, primarily due to increased shipments and lower maintenance and outage costs, partially offset by lower average realized prices. Flat-rolled steel shipments totaled 2.66 million tons for the just-ended quarter, compared with 2.54 million tons a year earlier.

In August, the company said it plans to spend at least $750 million in capital to modernize and enhance its Gary Steel Works facilities in Indiana as part of its revitalization program. U.S. Steel plans to modernize the 7.5 million-ton-per-year facility through 2021. Hatch Engineering (Mississauga, Ontario) is performing the preliminary engineering. For more information, see Industrial Info's project report.

The revitalization program is proceeding on schedule, Burritt told investment analysts during the company's earnings conference call last week.

"We're focused on revitalization of assets and making sure that we carry through that program and making sure that these assets are as productive as possible. As far as adding a bunch of capacity, that's not going to happen. We're going to run the assets that we have exceptionally well and do our best to return value to our stockholders, especially over the longer term," Burritt said. For related information, see November 21, 2017, article - U.S. Steel to Ramp Up Revitalization Program in 2018

In June, the company said it would restart the second of two blast furnaces at its Granite City Works in Illinois to support increased shipments beginning in the fourth quarter of this year. The $25 million restart of the 3,600-ton-per-day Blast Furnace "A" was completed in October. For more information, see Industrial Info's project report.

For related information on capital spending by the steel industry, see September 28, 2018, article - U.S. Steel Industry is All Smiles with Strong Profits, $3.7 Billion in Fourth-Quarter Kickoffs.

Chief Financial Officer Kevin Bradley said during the conference call that next year will be a peak period for asset revitalization in terms of capital expenditures, and that overall capital expenditures will be higher in 2019 than in 2018. Capital expenditures for the first three quarters of 2018 were $646 million, compared with $291 million in the same period last year.

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