United States Steel Corporation Forecasts Q1 2025 Losses but Anticipates Segment Strength
United States Steel Corporation (NYSE: X) has released its adjusted net earnings guidance for the first quarter of 2025, estimating a range of ($0.53) to ($0.49) per diluted share. Despite these expected losses, U.S. Steel expects to generate approximately $125 million in adjusted EBITDA for the period. This forecast reflects a mixed outlook, with challenges in some segments offset by improvements in others.
David B. Burritt, President and Chief Executive Officer of U.S. Steel, highlighted the company's ongoing efforts to manage operational efficiencies and cost control. He emphasized that the North American Flat-Rolled segment remains a key area of strength, benefiting from a strong commercial strategy and enhanced cost management practices. Additionally, the Mini Mill segment is poised for improvement in Q1 due to rising volumes from its Big River Steel (BRS) and Big River 2 (BR2) plants.
However, U.S. Steel faces continued challenges in Europe, where demand remains subdued despite slightly improved pricing conditions. The Tubular segment also faces headwinds from a lagging weak pricing environment. Nevertheless, Burritt expressed optimism about future pricing improvements in this sector.
Key Segment Performance: Flat-Rolled, Mini Mills, Europe, and Tubular
1. Flat-Rolled Segment:
The North American Flat-Rolled segment’s adjusted EBITDA is expected to decline compared to Q4 2024, primarily due to seasonal logistics constraints in the mining sector. However, the company expects this impact to unwind in Q2 2025. Higher average selling prices and increased volumes should partially offset these mining challenges. This segment remains crucial to U.S. Steel’s overall performance, benefiting from its commercial strategy and operational efficiencies.
2. Mini Mill Segment:
U.S. Steel anticipates a sequential improvement in its Mini Mill segment for Q1 2025. The company expects a significant ramp-up in volumes, particularly from Big River Steel (BRS) and its new Big River 2 (BR2) plant. BR2 is expected to contribute approximately $50 million in ramp-related costs to the first-quarter adjusted EBITDA. As BR2 approaches full capacity, it is expected to make a significant impact on U.S. Steel’s financials, contributing to EBITDA growth later in 2025 and beyond.
3. European Segment:
While the European segment is projected to experience higher adjusted EBITDA compared to Q4 2024, it continues to face challenges stemming from a subdued demand environment. The company anticipates improvements in shipments, volume efficiencies, and favorable raw material pricing, which should contribute to profitability. However, the market conditions in Europe remain uncertain, and U.S. Steel will continue to adjust production in response to customer demand.
4. Tubular Segment:
The Tubular segment is expected to see a slight improvement in adjusted EBITDA due to higher prime shipments and better average selling prices. Despite ongoing pressure from a weak pricing environment, the segment’s performance is expected to be stronger than the previous quarter. U.S. Steel remains optimistic about future pricing improvements and expects the Tubular segment to gradually recover as market conditions stabilize.
Big River Steel and Big River 2: Key Drivers for Future Growth
U.S. Steel’s Big River Steel operations continue to be a major focus for growth and efficiency. The company is particularly excited about the progress at BR2, which is on track to reach full operating capacity by 2026. Burritt emphasized that customer feedback on BR2’s product quality has been outstanding, and it is expected to make a significant contribution to the company’s EBITDA in 2025.
As BR2 ramps up production, U.S. Steel is confident that this facility will play a pivotal role in the company's long-term success, contributing to revenue growth, cost efficiencies, and free cash flow generation. The ramp-up process is expected to continue throughout 2025, with BR2 expected to reach full capacity by 2026, providing U.S. Steel with a competitive edge in the market.
Tariff Policy and Strategic Partnerships
Burritt also addressed the impact of recent U.S. tariff policies, specifically President Trump’s advocacy for the American steel industry. While U.S. Steel continues to assess the benefits of these tariffs, the company believes that the ongoing tariff protection for U.S. steel manufacturers will help improve domestic market conditions.
In addition, Burritt highlighted the company’s partnership with Nippon Steel, which includes investments, technology transfer, and innovation. This collaboration is expected to strengthen U.S. Steel’s position in the global steel market, enhancing the company’s technological capabilities and competitiveness moving forward.
Key Takeaways:
• Earnings Forecast: U.S. Steel expects adjusted net earnings per diluted share in Q1 2025 to range between ($0.53) and ($0.49).
• Adjusted EBITDA: The company anticipates adjusted EBITDA of approximately $125 million for Q1 2025.
• Flat-Rolled Segment: Adjusted EBITDA in this segment is expected to decline compared to Q4 2024 due to seasonal mining constraints, though higher prices and volumes should help offset the impact.
• Mini Mill Segment: The Mini Mill segment is expected to see improved performance, driven by increased volumes from Big River Steel (BRS) and Big River 2 (BR2).
• European Market: The European segment’s adjusted EBITDA is expected to improve due to higher shipments, efficiencies, and favorable raw material pricing, though demand remains weak.
• Tubular Segment: The Tubular segment is set to improve, with higher prime shipments and better average selling prices.
• Big River Steel (BR2): BR2 is expected to make a significant contribution to EBITDA in 2025, with full operating capacity expected by 2026.
• Tariff Impact: U.S. Steel continues to assess the benefits of U.S. steel tariffs and is optimistic about pricing improvements in the Tubular segment.
• Nippon Steel Partnership: The collaboration with Nippon Steel is poised to enhance U.S. Steel’s technological capabilities and market competitiveness.
