United States Steel and Steel Dynamics Look to Benefit as President Trump Calls for American Steel to Be Used in Pipelines

27 January 2017

Steel companies will look to benefit from the recent executive orders signed by President Trump to revive the Keystone XL and Dakota Access pipelines. President Trump has stated that he wants companies working on the pipeline to use American steel "like we used in the old days". Additionally, U.S. Steel CEO Mario Longhi was one of the members of the manufacturing council who met with President Trump on Monday.

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"We build the pipelines. We want to build the pipe. It's going to put a lot of workers, a lot of steelworkers, back to work," President Trump said while signing the executive orders on Tuesday. "That's what it has to do with, like we used to in the old days."

United States Steel Corporation (NYSE: X)

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United States Steel's shares declined 3.22 percent to close at $32.15 a share Wednesday. The stock traded between $31.31 and $33.17 on volume of 23.89 million shares traded. The company is scheduled to release results for the fourth quarter and full-year 2016 after market close on Tuesday, January 31st. United States Steel reported net earnings of $51 million, or $0.32 per diluted share, for the third quarter of 2016, compared to a net loss of $46 million, or $0.32 loss per diluted share, in the second quarter of 2016.

Commenting on U. S. Steel's outlook for 2016, U.S. Steel CEO Mario Longhi said in the company's third quarter earnings release, "As we move through the rest of 2016, operational issues remain a headwind for us, as we continue to recover from unplanned outages in the third quarter, while also completing our planned maintenance outages. We have identified the critical assets that require additional capital investment and increased maintenance spending in order to improve our reliability and quality, and to lower our costs."

Steel Dynamics, Inc. (NASDAQ: STLD)

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Steel Dynamics' shares fell 6.59 percent to close at $33.86 a share Wednesday. The stock traded between $33.33 and $35.99 on volume of 13.50 million shares traded. The company reported an annual net income of $382 million, or $1.56 per diluted share, for 2016, this compares to a net loss of $130 million, or $0.54 per diluted share, for 2015. Annual net sales totaled $7.8 billion for 2016, compared to $7.6 billion in 2015. Steel Dynamics reported net sales of $1.9 billion and net income of $20 million, or $0.08 per diluted share, for the fourth quarter of 2016. Consensus of analysts has called for earnings of $0.43 per share on revenue of $1.87 billion for the fourth quarter according to Thomson Reuters I/B/E/S.

"We continue to perform at the top of our industry, both operationally and financially," said Mark D. Millett, President and Chief Executive Officer. "We achieved record steel and fabrication shipments, and excluding the previously mentioned impairment charges, we earned record adjusted operating income of $861 million and near record adjusted EBITDA of $1.2 billion. The industry benefited this year from reduced flat roll steel imports, coupled with steady demand."

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