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Oldest US steel company resumes strategic funding

North America / Ferrous metallurgy

US Steel will resume funding for strategic projects in 2021 amid growing demand for steel in the United States.

Oldest US steel company resumes strategic funding

US Steel, the oldest steel company in the United States, expects to resume spending on strategic projects in 2021 after a suspension of operations earlier this year due to the coronavirus pandemic, top managers said on October 30.

Increased steel demand in the third quarter and high lead times for hot rolled coil have improved market sentiment, US Steel CEO David Berritt said during a conference call with analysts in the third quarter.

He noted that capacity utilization at U.S. plants rose from Q2, with total U.S. crude steel capacity utilization at 69.7% in the week ending Oct.24, according to the American Iron and Steel Institute. , up from 51.1% in the week ending May 2.

Hot rolled coil lead times have also increased to an average of 8.6 weeks as of October 28, according to S&P Global Platts.

“These industry statistics, along with our current order book and customer relationships, give us confidence that today's customer activity should continue into the next year,” Burritt said, noting that current capacity utilization flat products are probably closer to 80%, as they exceed long bars.

Given an improved demand scenario, US Steel is considering resuming Keetac iron ore production in Minnesota after a plant shutdown in April, Berritt said.

Looking ahead, given stronger market demand, US Steel plans to resume its previously planned strategic capital investments, executives said. After capital expenditures of approximately $ 750 million in 2020, US Steel plans to spend $ 675 million in 2021.

According to US Steel CFO Christie Breves, US Steel plans to invest approximately $ 80 million in upgrading the hot strip mill at its Gary Works facility due to planned shutdowns at its Indiana facility next year.

At its Mont Valley plant near Pittsburgh, US Steel plans to resume procurement of continuous casting and rolling equipment, with plans to spend about $ 150 million on the project next year, Breves said.

US Steel first announced plans to spend more than $ 1 billion to modernize its Mont Valley plants by building a new endless casting and rolling mill at Edgar Thomson's Braddock, PA, in May 2019. The company is currently in the process of obtaining permits for the project.

After spending $ 150 million on continuous casting and rolling equipment next year, spending between $ 1 billion and $ 1.2 billion will remain, according to Kevin Lewis, vice president of investor relations. The decision to build the facility will be made by the company based on market conditions, cash flow generation and liquidity, but the current focus is on equipment procurement, executives said.

"The keyword in all of this is actually optional, so we can decide to put it in the Mon Valley, we can decide to place it somewhere else, we have a lot of flexibility to decide where it goes when we'll pull the trigger on all of these things, ”Berritt said.

According to the company, US Steel's liquidity was $ 2.86 billion, including $ 1.7 billion at the end of the third quarter.

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