United States Steel Corp. has reported third quarter 2022 net earnings of $490 million, down by 75 percent from what it calls the “all-time best” $2 billion it netted in the third quarter of 2021.
“We delivered another solid quarter and are on pace for our second-best financial year ever and a third consecutive year of record safety performance,” U.S. Steel President and CEO David B. Burritt says. “Continued profitability and prudent working capital management resulted in healthy free cash flow that supported our strategic initiatives. Our assets are running well to deliver high-quality steel, safely and reliably to our customers.”
“Demand headwinds persisted through the third quarter. Across our integrated steelmaking mills, we responded quickly with footprint actions aligning supply with the current flat-rolled order book," Burritt says regarding current economic conditions. "The impact of these headwinds in our minimill [electric arc furnace] and U. S. Steel Europe segments were worsened by temporarily higher than normal raw material expenses in the quarter, as we worked through inventories built in response to the Ukrainian conflict.”
Although scrap prices fell throughout the third quarter of 2022, Pittsburgh-based U.S. Steel stocked up on pig iron and other nonscrap metallics after Ukraine (a major supplier of pig iron) was invaded by Russia in late February.
“While we expect to work through these costlier raw materials through year-end, we remain focused on the opportunity to in-source minimill metallics as a competitive cost advantage," Burritt says. "Results for U. S. Steel Europe were also negatively impacted by escalating energy costs, which we expect will also remain high.”
The company’s balance showed its electric arc furnace (EAF) minimill segment earned just $1 million in profits in the third quarter of 2022 compared with $424 million in net income in the third quarter of last year.
That business unit, which consists in part of the Big River Steel EAF mill in Arkansas, also produced about 28 percent less product in this year’s third quarter compared with last year: 1.097 million tons this year versus 1.517 million last year.
Looking ahead, Burritt says, “We are executing our Best for All strategy with confidence, supported by record cash of nearly $3.4 billion at quarter-end and our strong balance sheet. At year-end, we expect nearly 40 percent of our strategic investments to be complete, and they remain on time and on budget. These projects are expanding our competitive advantages in pursuit of our goal to provide lower-carbon steel solutions for our customers with less capital intensity while improving the free cash flow and margin performance of the business.”
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