| Falling Crude Prices Are the Biggest Headwind Facing U.S. Steel | |
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U.S. Steel Corporation's 2Q15 Earnings: Investor Highlights (Continued from Prior Part) Falling crude prices
In the previous part of this series, we discovered that declining steel imports over the last couple of months bodes well for steel companies including ArcelorMittal (MT) and Steel Dynamics (STLD). Most steel companies reported greater steel shipments in 2Q15. Meanwhile, steel demand from the energy sector has been quite subdued.
The steel products used by the energy industry (XLE) are also known as oil country tubular goods, or OCTG. U.S. Steel Corporation (X) is the biggest supplier of OCTG products in North America.
Lower energy capex
The above chart shows the total US rig count, based on weekly data released by oilfield services firm Baker Hughes. The rig count has fallen by more than 55% since November. But recently, the rig count has shown signs of stabilizing at current levels.
Energy exploration companies (XOP) have slashed their capital expenditure, or capex, budgets for the current year. Energy capex isn’t expected to turn around any time soon. There has to be a sustained upward movement in crude prices before energy companies will loosen their purse strings.
U.S. Steel’s Tubular segment
U.S. Steel’s Tubular segment, which produces OCTG products, has historically been the company’s most profitable segment. But the segment generated a massive loss in 2Q15, with a negative EBIT (earnings before interest and taxes) of $717 per ton. That’s quite a lot of money to lose on a per-ton basis.
There looks to be no respite for U.S. Steel’s Tubular segment in the coming months. This is likely to continue putting pressure on U.S. Steel’s earnings.
Please visit Market Realist’s Steel page to learn more about the industry.
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United States Steel Corporation
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CODE : X |
ISIN : US9129091081 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
United States Steel est une société de production minière de fer et de étain basée aux Etats-Unis D'Amerique. United States Steel est cotée aux Etats-Unis D'Amerique. Sa capitalisation boursière aujourd'hui est 6,4 milliards US$ (5,7 milliards €). La valeur de son action a atteint son plus bas niveau récent le 28 mars 2003 à 10,01 US$, et son plus haut niveau récent le 30 novembre 2007 à 98,85 US$. United States Steel possède 176 184 431 actions en circulation. |