| Is There More Downside to U.S. Steel’s Average Selling Price? | |
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Why U.S. Steel’s 4Q15 Results Sparked a Selling Spree (Continued from Prior Part) U.S. Steel’s average selling price
Steel companies’ earnings are sensitive to changes in steel prices. In recent quarters, steel companies’ earnings have been negatively impacted by falling steel prices. Steel prices in the US (VTI) have been weak for more than a year. In this part of the series, we’ll look at how U.S. Steel’s (X) average steel selling prices played out in 4Q15.
Prices fell
- U.S. Steel’s Flat-Rolled segment had an average steel selling price of $642 per metric ton in 4Q15. This is down more than 17% on a YoY (year-over-year) basis. As compared to 3Q15, the segment’s average steel selling prices fell almost 5%.
- In the Tubular segment, the average selling prices fell almost 22% in 4Q15 as compared to the same quarter last year. However, 4Q15 average selling prices rose marginally as compared to 3Q15. The Tubular segment supplies steel products to the energy sector. The steel demand from the energy sector was negatively hit due to lower crude oil prices.
- In Europe, U.S. Steel’s realized average steel selling prices were $477 per metric ton in 4Q15. This is down more than 20% compared to the same quarter last year. As compared to 3Q15, average selling prices have fallen ~5%. Lower steel prices in Europe will also hit ArcelorMittal (MT), as it gets almost half of its revenues from the region.
Other steel companies have also reported lower steel selling prices in 4Q15. AK Steel (AKS) and Steel Dynamics (STLD), respectively, reported a 6% and 24% YoY fall in average selling prices. However, AK Steel’s average steel selling prices in 4Q15 were higher as compared to 3Q15.
Outlook
We might see more downside to U.S. Steel’s average steel selling prices in 2016. As the contracts for 2016 have been rolled out at lower prices, U.S. Steel’s average steel selling prices in 2016 will be negatively impacted.
Meanwhile, U.S. Steel has factored in the weakness in contract pricing in its 2016 guidance. We’ll discuss more on this in the next part of the series.
Continue to Next Part Browse this series on Market Realist:
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United States Steel Corporation
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CODE : X |
ISIN : US9129091081 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
United States Steel is a iron and tin producing company based in United states of america. United States Steel is listed in United States of America. Its market capitalisation is US$ 6.6 billions as of today (€ 6.2 billions). Its stock quote reached its lowest recent point on March 28, 2003 at US$ 10.01, and its highest recent level on November 30, 2007 at US$ 98.85. United States Steel has 176 184 431 shares outstanding. |