United States Steel Corporation X announced that it has invested in two capital projects worth $277.5 million. The first capital project will involve the construction of a technologically advanced electric arc furnace (EAF) steelmaking facility at the company’s Fairfield Works in Birmingham, AL.
The second project will involve the construction of a tubular products coupling facility at Fairfield Works to manufacture couplings with premium, semi-premium and American Petroleum Institute (API) connections for oil and gas industry customers.
U.S. Steel’s shares, however, went down 7.1% last Thursday to close at $22.13 after the biggest steelmaker in the U.S. – Nucor Corp. NUE – provided weak guidance for the first quarter of 2015.
The investments are a part of U.S. Steel’s strategy to increase its operational flexibility and also to serve its customers better. The EAF is a part of the company’s transformation strategy – The Carnegie Way – in which a number of initiatives are undertaken to improve the company's customer intimacy, operating flexibility, cost structure and raw materials position.
The construction of the EAF will commence in the second quarter of 2015 and is expected to be completed by the third quarter of 2016. U.S. Steel has secured the required authorization and economic incentives from Jefferson County to invest $230 million to build the EAF at Fairfield Works to replace the facility's current blast furnace.
On the other hand, the tubular coupling facility is an important part of the company's plan to develop and manufacture oil country tubular goods (OCTG) products with premium connections. The facility will have four coupling cells for the manufacture of couplings for all of the company’s premium connections.
U.S. Steel has received the authorization to invest an extra $47.5 million for the construction of the coupling facility. The construction is anticipated to begin in the second quarter of 2015 and is expected to be complete in the first quarter of 2016.
Both the constructions are expected to create about 650 temporary construction jobs during their course and ensure the future of steelmaking in Alabama.
U.S. Steel currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the steel industry include Kobe Steel Ltd. KBSTY, and ThyssenKrupp AG TYEKF. Both Kobe Steel and ThyssenKrupp sport a Zacks Rank #1 (Strong Buy).
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