US Steel continues to focus on boosting U.S. pig iron supplies while shifting domestic and European raw material procurement patterns amid the ongoing war in Ukraine, the largest U.S. steelmaker said in a statement.
US Steel expects investment in pig iron at Gary Works to provide up to 50% of the iron ore requirements for its Big River Steel operations once construction is complete. In this way, the company will replace half of the purchased pig iron and direct reduced iron, hot briquetted iron and scrap metal at the mini-mill in Arkansas, CEO David Burritt said during a conference call.
"US Steel has a unique opportunity to turn low-cost iron ore ownership into feedstock for its expanding fleet of electric arc furnaces," said Burritt. “We continue to evaluate additional opportunities to further enhance our self-sufficiency and discover additional sources of differentiation.”
According to Kevin Lewis, head of investor relations at US Steel, after Russia's invasion of Ukraine disrupted global iron supplies, the Big River team changed the composition of the metals to reduce dependence on iron consumption.
US Steel Kosice, located in Slovakia, is working to mitigate the impact of the Ukrainian crisis on its raw materials supply chain, according to company executives.
"We use new and existing relationships to secure the supply of iron ore, coal and other raw materials while continuing to profitably meet customer demand," Burritt said.
While the conflict led to higher material costs, he says, higher steel prices contributed to excellent profit margins.
Despite the ongoing conflict in Ukraine, our facilities are operating at full capacity," Berritt said.
Overall, US Steel posted first-quarter net income of $882 million on sales of $5.23 billion. This is almost ten times the net income of $91 million on sales of $3.66 billion a year ago.