Clairton Works fire
In December, U.S. Steel Corporation (X) reported a fire incident at its Clairton Works coke facility that affected its pollution maintenance system. The company announced last week that the system is operating now and that it’s desulfurizing all of the coke oven gases. U.S. Steel has been fined ~$2 million since June 2018 for the plant’s higher emissions.
In its fourth-quarter earnings, U.S. Steel gave lower-than-expected first quarter guidance of $225 million. The guidance does not include the effects of the Clairton Works fire, which the company expects could impact its first-quarter earnings by $40 million. Of that total, U.S. Steel expects $15 million–$20 million to be related to the plant’s repair costs, and the rest to be related to the purchase of natural gas because it has not been able to use coke oven gases.
During U.S. Steel’s fourth-quarter earnings call, CEO David Burritt confirmed that the company has contingency plans if it encounters “any out-sized liabilities either environmental, operational” or “has to engage in some increased CapEx in any meaningful way.”
U.S. Steel has changed its guidance methodology this year and is set to stop giving annual guidance. Instead, it plans to provide quarterly guidance, like Nucor (NUE) and Steel Dynamics (STLD). On the contrary, AK Steel (AKS) has switched from giving quarterly guidance to annual guidance. To learn more, read AK Steel and U.S. Steel: A Tale for Two Guidance Methodologies.