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U.S. Steel (X), Kobe Steel to Construct New Line at Pro-Tec

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United States Steel Corporation (X - Free Report) and Japan’s Kobe Steel, Ltd. have agreed to start construction of a new continuous galvanizing line (CGL) at their subsidiaries’ joint venture, Pro-Tec Coating Company in Leipsic, OH. The move is in response to growing demand for advanced high-strength steels (AHSS).  

The new line, involving an investment of around $400 million, will use a proprietary process for coating steel that will help automakers make economically lightweight vehicles to meet increasing fuel efficiency requirements and maintain high safety standards.

The line will enable Pro-Tec to produce Generation 3 steels with a hot-dipped zinc coating, which automakers can utilize with their present stamping and assembly methods to make strong, safe and cost-effective structural components for vehicle bodies.

The CGL will have annual capacity of 500,000 tons. Construction is expected to start in fourth-quarter 2017. The line is expected to begin startup in 2019.

U.S. Steel, which is among the prominent U.S. steel makers along with Nucor Corporation (NUE - Free Report) , AK Steel Holding Corporation (AKS - Free Report) and Steel Dynamics, Inc. (STLD - Free Report) , provided an optimistic view for 2017 in July.

The company now expects net earnings of around $300 million or $1.70 per share for 2017, up from $260 million or $1.50 per share it expected earlier. The company is seeing positive sentiment in the markets served by Flat-Rolled and U.S. Steel Europe (USSE) units. Its Tubular unit is also gaining from operational and cost improvements and strong market conditions.  
 
U.S. Steel is expected to gain from healthy automotive demand. Also, the company is actively engaged in improving its cost structure and increasing revenues on a sustainable basis through its “Carnegie Way” initiative. The company sees incremental impact from Carnegie Way benefits of $390 million for full-year 2017 as compared with 2016.

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