U.S. Steel to Invest in Value-Added Steel as Part of Carnegie Way
Value-added steel products sell at higher prices compared to standard steel products. This is also part of the Carnegie Way plan.
There are two basic types of steel production processes: blast furnace (or BF) and electric arc furnace (or EAF).
U.S Steel has embarked on an ambitious transformation plan, which it named “Carnegie Way.”
The energy sector is an important customer segment for U.S. Steel (X). Almost one-sixth of U.S. Steel’s revenues come from the energy sector.
Lower crude oil prices are the primary reason behind falling oil rig counts. Leading energy companies have reduced their 2015 capital expenditure targets.
A massive increase in steel imports has been the single biggest risk for the US steel industry. U.S. Steel faces challenges in its tubular segment also.
U.S. Steel has an iconic past, but it has lost a lot of its sheen in the last few years. However, it’s working on a transformation program.
Europe’s economic indicators have been steady so far in 2015, coming while the economic data from China has been worsening.
A sustained recovery in the EU housing market should boost the European steel industry. However, the housing industry has been giving mixed signals.
Steel production in Germany, which is the biggest steel consumer in the EU, decreased 1.6% in February after growing 0.5% in January.
As earlier inventories are sold first, steel demand from service centers could be hit this year, which would be negative for steel producers in the US.
Boron alloy steel comprised an estimated one-third of steel exports from China last year. Chinese authorities have since clamped down on this tax loophole.
China’s official PMI has been below 50 for two straight months, reflecting a slowdown in its economy and impacting demand for industrial commodities.
The overall trend in China’s passenger car sales has been quite uneven. This sector continues to grow, albeit at a much slower pace than in previous years.
China’s real estate sector is a key driver of global steel markets. Its construction industry accounts for more than a quarter of global steel consumption.
Property prices have also been weak in China. New home prices have fallen in 66 out of 70 top Chinese cities and in January, prices had fallen in 64 cities.
Later this month, several top executives of US steel companies will testify at a Congressional hearing, pleading their case against steel imports.
A low capacity utilization rate increases competition between existing industry players. This pressures steel prices as producers try to increase sales.
Steel production in the United States has declined this year. Through March 7, 2015, steel production is down 3.4% over the same period in 2014.
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