United States Steel Corporation (NYSE: X), or U.S. Steel, traces its roots to the sale of Andrew Carnegie’s steel company to J. P. Morgan back in 1901.
Even though its stature has declined alongside the waning strength of the American steel industry over the years, it remains among the largest and best-known steel producers in the U.S.
But a domestic revitalization is on the horizon. U.S. Steel is now hiring in the wake of President Donald Trump’s steel tariffs.
The Pittsburgh-based company says it will restart the second of two shuttered blast furnaces at its Granite City mill in the Metro East, Illinois, area. And it will hire 300 employees in the process.
U.S. Steel’s decision follows its March announcement that it would restart the other blast furnace at the Granite City Works facility and recall 500 workers.
U.S. Steel laid off approximately 2,000 workers when it idled both furnaces back in 2015. The plant never completely idled, but worker count went as low as about 100 people.
The company says the restart of the first furnace is in progress and the second furnace should be in operation by the beginning of October.
U.S. Steel CEO David Burritt said the following in a press release:
After careful consideration of market conditions and customer demand, including the impact of Section 232, the restart of the two blast furnaces at Granite City Works will allow us to serve our customers’ growing demand for high quality products melted and poured in the United States.
Section 232 refers to the part of the trade law that Trump invoked in March. It imposed tariffs on steel and aluminum imports — citing national security concerns.
Waivers were initially granted to many U.S. allies. But last week, the Trump administration slapped a 25% tariff on steel imports and a 10% tariff on aluminum imports from Canada, Mexico, and the European Union.
But all three parties are retaliating with their own tariffs on U.S. goods.
Meanwhile, U.S. Steel has praised the tariffs and said they’re good for local business.
The company claims that the penalties level the playing field for domestic steelmakers, which have long been hurt by cheap foreign steel flooding the U.S. market.
But U.S. Steel also noted that it’s expecting its earnings before interest, tax, depreciation, and amortization (EBITDA) for 2018 to be around the top end of the earlier announced range of $1.7 billion to $1.8 billion.
It also reaffirmed its second-quarter EBITDA guidance of around $400 million.
As a whole, U.S. steel prices are on the upswing from the Trump administration’s trade actions to curb imports. This is reflected by the run-up in hot-rolled steel prices.
Prices are up by almost 30% so far this year and more than 13% since March 1st.
And U.S. Steel has significantly outperformed the industry over the past year. The company’s shares have rallied by around 76.6% over this period, compared with the roughly 38.3% rise recorded by the industry.
Forecast-topping earnings performance from the last three quarters, upbeat outlook for 2018, and the Trump administration’s trade actions on imported steel have all contributed to the rally in the company’s shares.
The steel tariffs set in place back in March are meant to protect the domestic steel industry, which has long struggled to cope with a tide of subsidized foreign imports.
The tariffs will lead to fewer imports into the U.S. And that will, in turn, boost demand for American-made steel and give domestic steelmakers more pricing power.
Meanwhile, U.S. Steel is actively engaging in improving its cost structure and operations on a sustainable basis through its “Carnegie Way” initiative. This includes actions such as manufacturing process and logistics improvements and also saving on selling, general, and administrative (SG&A) costs.
These actions are expected to deliver meaningful benefits in 2018.
That’s all for now.
Until next time,
John Peterson
Pro Trader Today