USS expects lower Q2 profits, gives update on Big River

“We continue to run our business safely as we make progress towards closing our transaction with Nippon Steel Corp.,” President and CEO David B. Burritt said in a statement on Monday.

The company said adjusted Ebitda is expected to be ~$425 million in Q2.

Burritt noted that this is the lower end of USS’ prior Q2 outlook. He added that this “reflects stable domestic flat-rolled steel end-use demand despite a dynamic spot steel pricing environment.”

Additionally, the company projects net earnings attributable to USS to be $160 million in Q2’24. This is down considerably from the $483 million logged a year earlier.

Big River Steel

Burritt said the Big River Steel dual Galvalume/Galvanized coating line came online in the second quarter at the Osceola, Ark, mill.

He added that USS continues to progress towards the planned start-up of Big River 2 in H2’24, “with ~$30 million of related start-up and one-time construction costs for both projects included in our second-quarter adjusted Ebitda guidance.”

“Both mini mills, along with electrical steels from our new non-grain oriented (NGO) finishing line, will increase our capability to provide the sustainable steels that are increasingly in demand from an expanding group of end markets,” Burritt said.

A request for comment for further information on Big River 2’s timeline was not returned by time of publication.

Nippon deal

Regarding Japan’s Nippon Steel’s proposed ~$14 billion purchase of USS, Burritt said that in Q2’24, “significant milestones” were achieved “as we progress towards closing the transaction.”

He said these included obtaining “overwhelming approval by our shareholders and the receipt of all non-US regulatory approvals.”

Also, the company continues to work towards the remaining US regulatory approvals.

Individual segments

Flat-rolled

The flat-rolled segment’s adjusted Ebitda is anticipated to be higher than the first quarter, U.S. Steel said. Despite lower prices, the company said “diversified end-market exposure” and successful annual fixed-contract negotiations in Q1 will help keep average selling prices and shipments consistent.

Mini-mill

The mini-mill segment’s adjusted Ebitda is expected to be lower than Q1.

“Average selling prices are expected to be sequentially lower reflecting the segment’s market-based monthly contract and spot price exposure,” the company said.

Higher shipment volumes and lower metallics costs are seen as partially offsetting pricing headwinds.

European, tubular segments

The European segment’s adjusted Ebitda is anticipated to be lower than Q1. The company’s #2 blast furnace at Kosice in Slovakia was temporarily idled in the quarter due to soft demand. This is expected to lead to lower volumes.

The tubular segment’s adjusted Ebitda is also expected to be lower than Q1 due to lower selling prices.