Will the US steel stock regain its momentum?
The actions of United States Steel Corporation (NYSE: X) report a correction after seeing a strong recovery in early 2022. As the Russian-Ukrainian war continues to trigger volatility in global energy markets, the EIA forecast that the benchmark Brent crude is expected to decline in 2023, indicating a likelihood of increased discretionary spending in the years to come. Given US Steel’s strong presence in developed economies with a broad product portfolio, its finances are expected to improve on rising demand. We highlight historical revenue trends in US Steel revenue across key operating segments in an interactive dashboard analysis.
US Steel is the nation’s largest steel producer
In 2021, US Steel reported 16 million tons of total steel production against a total capacity of 26.2 million tons. Geographically, North America and Europe represent respectively 80% and 20% of total sales. With a product portfolio including hot rolled steel, cold rolled steel and coated steel, the company caters to a wide customer base in the United States and Europe. In 2021, the company’s exposure to the automotive, construction, distribution, packaging, appliance and other markets was 19%, 18%, 43%, 9%, 9% and 2%, respectively. Apparent steel consumption in Europe and North America is approximately 149 million tons and 124 million tons, respectively. Given the underlying strength of demand, rising steel prices and its presence in Europe and North America, the company should see revenue growth in the coming years. to come.
Main market trends
North American light vehicle production has held steady at 13 million units over the past two years, nearly 3 million units below the 10-year historical average. However, the US construction sector grew on the strength of housing despite lower government spending in the non-residential sector. Similarly in Europe, the construction and automotive sectors represent respectively 35% and 18% of total steel consumption. Despite the continued repercussions of the war, EUROFER (The European Steel Association) forecasts construction output growth of 2.3% in 2022 and 1.5% in 2023. The European automotive industry has seen a slight rebound in 4% in 2021, indicating underlying demand strength and the likelihood of a recovery as macroeconomic uncertainties ease. (Related: Is Freeport-McMoRan stock a buy?)
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