U.S. Steel Corporation’s 3Q17 earnings
In this part of the series, we’ll see what analysts are projecting for U.S. Steel Corporation’s 3Q17 earnings. According to consensus estimates compiled by Thomson Reuters, U.S. Steel Corporation is expected to post revenues of $3.06 billion in 3Q17 versus $3.14 billion in the sequential quarter.
U.S. Steel Corporation is expected to post adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $355.0 million in 3Q17, which is slightly lower than 2Q17. As noted previously, Nucor (NUE) expects its profits to fall sharply in 3Q17 compared to the previous quarter. Let’s see why U.S. Steel Corporation’s 3Q17 earnings are expected to be similar to 2Q17.
Raw material mix
U.S. Steel Corporation mainly uses iron ore for its blast furnaces. For its US operations, iron ore is supplied by its captive mines, making the company immune from the volatility in iron ore prices (CLF). While higher scrap prices negatively impact U.S. Steel Corporation, the effect is not as much as for Nucor and Steel Dynamics, which primarily use steel scrap for their electric arc furnaces. U.S. Steel Corporation, AK Steel (AKS), and ArcelorMittal (MT) buy coal under annual contracts in their US operations, thus saving them from the day-to-day volatility in coking coal prices.
Simply put, U.S. Steel Corporation might not see a major spike in its input costs compared to mini-mills. In the next part, we’ll see what analysts are projecting for AK Steel’s 3Q17 earnings.