US Steel Prices Drop on Weaker Than Expected Outlook

The Key Takeaways

• U.S. Steel stated that lower prices as well as the cost of ramping up a new plant will have a negative impact on the current quarter results.
• The company's outlook for an adjusted loss and adjusted EBITDA were below forecasts.
• The news came just days before U.S. officials will decide on whether to approve Nippon Steel's purchase of the company, which is opposed by both President Biden and President-elect Trump.

U.S. Steel’s (X) stock fell on Friday after the company gave a weaker than expected guidance for its current quarter due to falling steel prices and costs associated with constructing a new factory in Arkansas.

It said that it expects a fourth-quarter adjusted loss between $0.25 and $0.29, as well as adjusted earnings (before interest, taxes and depreciation and amortization) of 150 million dollars. Visible Alpha surveyed analysts who expected an adjusted profit per share of $0.16, and adjusted EBITDA to be $251 million.

David Burritt, Chief Executive Officer (CEO), explains that “steel prices remained depressed and BR2 ramp-related costs exert pressure on the quarter.” BR2, or Big River 2, is a steelmaking facility near Osceola, Ark., which the company said would be the most advanced in North America.

European Demand, Pricing Weak

Burritt added that while the company's North America Flat-Rolled segment continues to produce solid EBITDA because of a diverse product mix, weak demand and pricing have negatively impacted results in Europe. 

This news is coming just days before U.S. regulatory officials are set to make a decision on the approval of Nippon Steel’s $14 billion acquisition of U.S. Steel. Both President Biden, and the President-elect Trump expressed their opposition to this merger. 

Financial Times reports that Nippon Executive Takahiro Mouri has flown around America, meeting with Washington officials and steelworkers to try and salvage the deal.

U.S. Steel’s shares dropped 4% in value on Friday, and they have now lost 38% so far this year.

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