Overview of the Business of U.S. Flat-Rolled Products Segment
What Does It Offer?
The Flat-Rolled segment includes U. S. Steel’s integrated steel plants in North America involved in the production of slabs, strip mill plates, sheets and tin mill products, as well as all iron ore and coke production facilities in the United States.
The Segment has an annual raw steel production capability of 17.0 million tons from Gary Works, Mon Valley Works, Great Lakes Works, and Granite City Works facilities.
Production increased from 10.7 million tons in 2016 to 11.9 million tons in 2018.
Production averaged 70 percent of capability in 2018, much higher than 63 percent of capability in 2016.
Who Is The Customer?
Flat-Rolled segment is focused on customers in the following 3 categories:
Automotive: solutions such as the next generation of advanced high strength steel (AHSS) to address challenges including increased fuel economy standards and enhanced safety requirements.
Consumer Solutions: partners with customers in the appliance, packaging, container, and construction markets.
Industrial, Service Center and Mining Solutions: focuses on the Company's customers in the service center business, pipe and tube manufacturing markets, and agricultural and industrial equipment markets.
What Are The Alternatives?
The segment faces intense competition from other global steel giants such as:
A.K. Steel Holding CorporationNucorArcelorMittal
US Flat-Rolled segment has added $2.2 billion in revenues between 2016 and 2018, led by a sharp increase in steel prices.Price realized increased from $744/ton in 2016 to $921/ton in 2018, driven by accelerated demand for steel products in line with the recent economic growth, as well as the supply-demand balance between imported and domestic steel.Additionally, the restart of the two blast furnaces at the Granite City Works during 2018 enabled the company to take advantage of the improved market dynamics with higher shipments.However, segment revenue is expected to decline in the next two years, driven by lower shipments.Decrease in shipments would reflect a loss of volume from ongoing repair works at Great Lakes Works facility.
Despite increase in both, the segment as well as company's revenue in recent years, flat-rolled products' share in US Steel's total revenue has fallen from 73.2% in 2016 to 67.7% in 2017.However, the share increased to 68.3% in 2018, at the cost of slowdown in the European operations.The metric is expected to continue rising in the near term, with US Flat-Rolled commanding a share of over 70% of the total revenue base, thus being the primary driver of the company's revenue growth in the near term
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