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A Deeper Dive into U.S. Steel Corporation’s 4Q17 Revenues

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U.S. Steel Corporation’s 4Q17 revenue beat

U.S. Steel Corporation (X) posted revenues of $3.1 billion in 4Q17. In comparison, the company posted revenues of $3.2 billion in 3Q17 and $2.6 billion in 4Q16. U.S. Steel Corporation’s 4Q17 revenues were better than expected. In this part, we’ll look at the key drivers of U.S. Steel Corporation’s 4Q17 revenues.

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Shipments

For steel companies, revenues are a function of shipments and average steel selling prices (CLF) (STLD). U.S. Steel Corporation shipped 3.87 million tons of steel in 4Q17. The company’s steel shipments were 3.76 million tons in 4Q16 and 3.79 million tons in 3Q17. U.S. Steel Corporation’s 4Q17 steel shipments rose on a yearly and sequential basis. Looking at other steel producers, Nucor (NUE) and AK Steel (AKS) reported sequentially lower steel shipments in 4Q17.

The sequential increase in U.S. Steel Corporation’s 4Q17 steel shipments is due to higher shipments in Europe. U.S. Steel Corporation shipped 1.25 million tons of steel in Europe in 4Q17—compared to 1.06 million tons in 3Q17. The increase was mainly due to seasonality in Europe. Steel shipments are seasonally lower in the third quarter. Looking at its US operations, U.S. Steel Corporation’s Flat-Rolled and Tubular segments reported fewer shipments in 4Q17—compared to 3Q17.

Steel prices

All three of U.S. Steel Corporation’s business segments reported sequentially lower ASP (average selling prices) in 4Q17. The Flat-Rolled segment’s ASP fell from $728 per ton in 3Q17 to $717 per ton in 4Q17. In Europe, U.S. Steel Corporation’s ASP in dollar terms fell from $639 per ton in 3Q17 to $634 per ton in 4Q17.

Lower ASP drove down U.S. Steel Corporation’s 4Q17 revenues. However, higher steel shipments offset the negative impact from lower steel prices. The lower ASP in 4Q17 dented U.S. Steel Corporation’s profitability.

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