United States Steel Corporation (X - Free Report) is set to reopen the second of two blast furnaces at its integrated steelmaking plant, Granite City Works, in Illinois. The company plans to restart the blast furnace around Oct 1.
The steel giant said that it will hire roughly 300 workers for the restart that is expected to support the growing demand for steel made in the United States. The move will also support higher expected shipments starting in fourth-quarter 2018 and also enable U.S. Steel to support customers during its planned asset revitalization initiatives.
The company, in March, declared the restart of the other Granite City Works blast furnace and steelmaking operations that brought back 500 employees. The restart of that blast furnace is in progress.
Notably, both the blast furnaces of Granite City Works and its steelmaking facilities were idled in December 2015. In January 2016, the plant’s hot strip mill was idled in response to challenging market conditions, including unfairly traded imports and surplus global steel capacity.
U.S. Steel also noted that it now expects EBITDA for 2018 to be at or near the top end of the earler announced range of $1.7-$1.8 billion. It also reaffirmed its second-quarter EBITDA guidance of around $400 million.
U.S. Steel has significantly outperformed the industry over a year. The company’s shares have rallied around 76.6% over this period, compared with roughly 38.3% rise recorded by the industry. Forecast-topping earnings performance in the last three quarters, upbeat outlook for 2018 and the Trump administration’s trade actions on imported steel have contributed to the rally in the company’s shares.
U.S. Steel swung to a profit in the first quarter on the back of improved results across all three of its reportable segments. The company saw higher average realized prices across its segments in the quarter.
Steel prices have been on an upswing in the United States on the back of the Trump administration’s trade actions to curb imports, reflected by the run-up in hot-rolled steel prices. Higher steel prices supported U.S. Steel’s results in the first quarter.
The Trump administration, in March, slapped a 25% tariff on steel imports aimed at protecting the U.S. steel industry which had long struggled to cope with a tide of subsidized foreign imports. The tariffs would lead to lower imports into the United States, which would in turn boost demand for American steel and also give domestic steel makers more pricing power.
Meanwhile, U.S. Steel is actively engaged in improving its cost structure and operations on a sustainable basis through its “Carnegie Way” initiative that includes actions such as manufacturing process/logistics improvements and savings on SG&A costs. These actions are expected to deliver meaningful benefits in 2018.
U.S. Steel is a Zacks Rank #3 (Hold) stock.
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include Westlake Chemical Corporation (WLK - Free Report) , The Chemours Company (CC - Free Report) and Celanese Corporation (CE - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied roughly 89% over a year.
Chemours has an expected long-term earnings growth rate of 15.5%. The company’s shares have gained around 26% in a year.
Celanese has an expected long-term earnings growth rate of 8.9%. Its shares have rallied roughly 30% over a year.
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