Pittsburgh-based United States Steel Corporation updated its second quarter outlook today, predicting adjusted earnings of $315 million. That figure excludes some charges, including about $100 million in restructuring. The company’s expected liquidity requirements through the end of the year are $700 million, unchanged from the company’s May 21 prediction.
The COVID-19 pandemic froze production lines for weeks or months and crushed demand for steel, even as the plants which produced it were forced to close or slow production as well. The worst of the economic fallout is predicted to come during the second quarter, followed by a slow return to normal conditions. Specifically, U.S. Steel predicts its flat-rolled segment will see much worse results than the first quarter thanks to shutdowns in automotive plants and the energy end-market.
“As expected, the second quarter is being significantly impacted by the effects of COVID-19 and the expected nonrecurring costs associated with a significant portion of our steelmaking operations being idled in the quarter,” said U.S. Steel CEO David B. Burritt in a statement.
Burrit said optimism at the company was “growing” despite the challenging second quarter thanks to OEMs restarting operations and returning demand. “Protecting lives and livelihoods remains our top priority and by keeping our employees and communities safe and the business resilient, we can continue to meet our customers’ needs as we emerge from unprecedented market conditions,” said Burritt.
The World Steel Association recently predicted that global steel demand would decline 6.4% over the year to 1.654 billion metric tons as a result of the pandemic, before recovering 3.8% to 1.717 billion metric tons in 2021. Complicating matters for U.S.-based steelmakers like U.S. Steel is China’s sustained dominance in the field. According to the WSA’s June 7 report, China’s economic recovery started in late February, just as the COVID-19 impact ended the longest growth period on record in the United States. It has since returned to 100% productivity in April. China regularly produces about half of all raw steel in the world.
