U.S. Steel will continue to go forward with major investments, including $750 million at its Gary Works steel mill over the next few years, despite the tougher market conditions.
"The team continues to execute delivering projects on time and on budget," U.S. Steel CEO David Burritt said during a conference call with investors Friday. "These are significant projects on key strategic assets focused on improving reliability that generate throughput and efficiency benefits. For example, caster upgrades at Gary Works, finishing mill stand motor upgrades at our Gary Works hot strip mill and blast furnace and steel shop enhancements at our Mon Valley Works."
U.S. Steel turned a profit of $68 million in the second quarter, which was down 68% year over year.
"The market has been challenging over the past few months, but we have made a lot of progress since our last call," Burritt said during the conference call. "We are executing better, so today we will focus our discussion on execution. We are playing offense, and we are stronger, more competitive."
Burritt said prices were starting to recover, but there would be a lag in seeing the benefits. U.S. Steel continues to work on projects it said will improve its capabilities and reliability.
"While we have seen market challenges persist, we are focused on what we control and are adapting to market opportunities and challenges. For sure, we have work to do, but our goal remains the same, execute the strategy and deliver long-term value for our stockholders. Let me be clear," Burritt said. "Our critical assets are better and performing at improved levels through June 30, 2019, because of asset revitalization. We are playing offense and have delivered on every asset revitalization target, for EBITDA, for capex, for reliability, for quality."
U.S. Steel is investing in assets that give it a competitive advantage, such as a hot-strip mill heavy-gauge steel at Gary Works, Burritt said.
"So far this year, we have spent approximately $320 million of capital on 67 projects, including approximately $130 million on asset revitalization capital," he said. "Again, these projects advanced operational excellence, expanded capabilities and improved reliability and quality and delivery."
A blast furnace in Mon Valley for instance is seeing 200,000 tons in additional throughput because of hood replacements.
"Projects just like these make us more competitive today and secure our long-term future," he said. "Our assets are more competitive. Our assets are more reliable and we are delivering for our customers."