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U.S. Steel Sets New Stock Buyback After Metal-Price Surge

U.S. Steel Sets New Stock Buyback After Metal-Price Surge

U.S. Steel Corp. shares gained the most since early November after the company announced plans to buy back $500 million of its shares and projected a strong 2022 outlook.

Shares of the Pittsburgh-based steelmaker rose as much as 6.8% on Friday, making it the top performer on the Bloomberg Americas Iron/Steel Index.

The company is rewarding investors after a surge last year in benchmark steel prices drove one of its most profitable years ever. The rally in the metal fizzled late in 2021 and prices have come under further pressure in January, but U.S. Steel remains “overwhelmingly positive” on the prospects for this year, Chief Executive Officer David Burritt said.

“While markets continue to self-correct, the macro backdrop is favorable, supply chain issues will ease, and inflationary pressures will abate,” Burritt said during a call with analysts to discuss fourth-quarter results.

The company will continue to repurchase its own stock “especially when it is trading at what we believe is a significant discount,” Burritt said.

U.S. Steel is seeing the original equipment manufacturers order books for autos and appliances increase each month in the first quarter, while orders in Europe are expected to accelerate in the seasonally strong second quarter, according to Burritt.

The comments echoed those from Nucor Corp., the largest U.S. steel producer. Nucor CEO Leon Topalian told analysts that demand in every steel end market remains “very robust.” Topalian said he was upbeat about backlogs and shipments, but also said the industry may have seen some overbuying. 

Last week, the chief of Stelco Holdings Inc. warned investors that the North America steel market is in for some rough months ahead, with demand shrinking and excess supplies. 

©2022 Bloomberg L.P.