Why We’re Raising Our Price Estimate For U.S. Steel To $18

We are raising our price estimate for U.S. Steel to $17.69, which is primarily driven by an improvement in the prospects of the U.S. Flat-rolled division. The fortunes of the U.S. Flat-rolled division (which is the company’s largest division, accounting for around three-fourths of its revenue) have improved with the imposition of anti-dumping duties by the Department Of Commerce (DOC) on steel imports from a number of countries, including China. Though the DOC’s preliminary ruling still needs to be confirmed in a final ruling by the U.S. International Trade Commission (USITC) expected later in the year, the impact of regulatory action is already being felt with an increase in steel prices in the U.S. and a reduction in the share of imported steels in the U.S. domestic steel shipments. The improved prospects of the U.S. Flat-rolled division are also underpinned by robust demand for steel in the U.S., with demand expected to grow by 3.2% and 2.7% in the U.S. in 2016 and 2017 (as per World Steel Association estimates) respectively, after a contraction in demand in 2015. The aforementioned factors have been captured in our revised shipment and pricing forecasts for the U.S. Flat-rolled division.

Have more questions about U.S. Steel? See the links below.

• What Is U.S. Steel’s Revenue And EBITDA Breakdown?
• What Is U.S. Steel’s Fundamental Value Based On Expected 2015 Results?
• How Has U.S. Steel’s Revenue Composition Changed Over The Last 5 Years?
• By What Percentage Did U.S. Steel’s Revenue & EBITDA Change In The Last 5 Years?
• By What Percentage Can U.S. Steel’s Revenue & EBITDA Grow In The Next 3 Years?
• How Has The Increase In Steel Imports To The U.S. Impacted U.S. Steel’s U.S. Flat-Rolled Steel Operations?
• How Has The Decline In Oil Prices Impacted U.S. Steel’s Tubular Steel Shipments?

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