US Steel Kosice expects lower shipments in 2020

US Steel Kosice (USSK) expects to ship 3.2 million net tons of steel products in 2020, says parent US Steel. This comes after sales in 2019 fell -19% on-year to 3.59mnt.

In the fourth quarter of 2019 alone the Slovakian mill’s shipments slumped -29% on-year to 757,000nt, with average realised price down -9% to $622/net ton.

Raw steel production fell -36% in the quarter to 773,000nt, with capacity utilisation sliding to 61% from 96% in Q4 2018. Net sales dropped -38% to $478 million, with Ebitda sliding to negative $7m versus positive $85m in the year-earlier quarter.

Profitability suffered in Q4 from lower sales prices and decreased volumes, as well as higher cost of iron ore. However, it benefited from cost control measures and fewer planned outages, as well as a CO2 tax refund and annual electricity cost compensation rebate.

Service centre destocking continued throughout Q4, with activity increasing in early Q1 2020, driven by price increase announcements.

Last year USSK idled blast furnace no.2 on account of the weak market (see Kallanish passim). It has two other blast furnaces that remain operational. The firm also recently postponed its dynamo steel strip investment in 2020.

Affecting the firm were EU car production which decreased -4.7% on-year in 2019 to 17.6 million units, while a -0.9% decline is projected for 2020. Car output in the Visegrad 4 countries rose 1.1% last year to 3.58m units, but is expected to fall -0.7% in 2020, US Steel says.

The bloc’s construction sector activity is expected to have grown 2.3% in 2019 and is foreseen growing 1.1% this year.

USSK’s full-year 2019 raw steel production slumped -22% on-year to 3.9mnt, with capacity utilisation down to 78% from 100% a year earlier. The firm sourced 424,000nt of iron ore from its parent company versus zero in 2018. Net sales fell -25% to $2.42 billion, and Ebitda slumped -92% to $35m. Capital expenditure rose 47% to $153m.