In the previous part, we discussed steel companies’ second-quarter shipments. In this part, we’ll see what could drive steel companies’ shipments in the third quarter and beyond.
U.S. Steel Corporation (X) could see sequentially higher steel shipments in the third and fourth quarter. During the company’s second-quarter earnings call, U.S. Steel Corporation said that it could see an incremental rise of 1.5 million tons of steel shipments next year provided that the US steel demand stays strong. Additional tons are expected from the company’s Granite City facility where one blast furnace has already started production. The second blast furnace is expected to come online in October. Recently, President Trump visited U.S. Steel Corporation’s Granite City facility.
During AK Steel’s (AKS) second-quarter earnings call, Jaime Vasquez, AK Steel’s CFO, said, “We estimate that our third quarter flat-rolled steel shipments will increase about 5% from the second quarter due to higher shipments into the distributor and converter market and the infrastructure and manufacturing market.”
According to Steel Dynamics (STLD), “The company’s steel production utilization rate was 99 percent in the second quarter 2018, compared to 94 percent in the sequential first quarter and 91 percent in the second quarter of 2017.” Nucor’s (NUE) operating rate rose to 95% in the second quarter. Looking at high capacity utilization rates, Nucor and Steel Dynamics might not be able to offer a large incremental rise in their third-quarter shipments. In the long term, the companies could see higher shipments because they’re adding fresh capacity.
Along with steel shipments, we also need to look at average steel selling prices (CLF). Next, we’ll compare steel companies’ average selling prices in the second quarter.