Good morning, everyone, and welcome to United States Steel Corporation's First Quarter 2021 Earnings Conference Call and Webcast. As a reminder, today's call is being recorded. I'll now hand the call over to Kevin Lewis, Vice President of Investor Relations and Corporate FP&A. Please go ahead..

Thank you and good morning. We appreciate your continued interest in US Steel and welcome you to our first quarter 2021 earnings call.

On the call with me this morning will be US Steel President and CEO, Dave Burritt; Senior Vice President and CFO, Christie Breves; and Senior Vice President and Chief Strategy and Sustainability Officer, Rich Fruehauf..

Thank you, Kevin. Good morning, everyone. Thank you for being a part of today's call and for your interest in US Steel. Last quarter, you heard us reference optimism, optionality and opportunity for 2021. Well, those themes are confirmed in our first quarter performance and our outlook for the rest of the year and beyond.

First on optimism, our first quarter performance and expectations for record second quarter EBITDA margins for our flat-rolled and mini mill segments confirm our optimism. Our operations are running well.

And in a market where every single ton of quality steel produced matters, I am pleased to report record quality and reliability performance at numerous facilities across our footprint. Strong market conditions are great, but we are delivering on the fundamentals that keep our business resilient throughout the market cycle.

Second on optionality, Big River Steel's first quarter performance and early successes of our best of both footprint confirm the inherent optionality of our strategy.

And opportunity, our best of both footprint created the opportunity for US Steel to be the industry leader in sustainability launching our verdeX line of sustainable steels becoming the first North American producer to join Responsible Steel, and announcing our 2015 net zero aspiration, confirms our sustainability leadership role in American steelmaking.

Rich will detail how best of both footprint creates the foundation for differentiated sustainable steels only available from US Steel. Let's get started on Slide 5. You heard us speak in January about our continued optimism for steel markets. While our optimism has been exceeded by what is happening in the market today.

Today's robust demand long lead times and insight from customers have us even more bullish. Further strengthening of the economy and a much-needed infrastructure bill would be catalysts for additional earnings growth. Another factor in forming our market perspective is today's supportive steel making cost.

Cost for steelmaking inputs, particularly scrap and iron ore are supporting today's higher steel price environment. This is where US Steel has a compelling competitive advantage..

Thank you, Dave. We are pleased to announce our verdeX line of sustainable steels, the first of its kind in the domestic steel industry. This is US Steel's best of both strategy realized in a new game changing product. verdeX combines the best of minimal production with the best finishing technology from our existing flat-rolled business.

Through this combination, we are now able to offer our customers some of our most proprietary grades of steel, including our XG3 grades or generation three advanced high strength steels now with up to a 75% reduction in CO2 emissions.

We are the market leader in generation three advanced high strength steels and we're ready to take the next step with customers by offering a green sustainable version of our most advanced steel products. This is something our competition cannot offer today.

Big River steel substrate together with our world class finishing assets that are being qualified with many customers and OEMs creates a unique customer solution. We've heard our customers.

We understand their needs for more sustainable solutions and we are meeting their request to provide them with the sustainable steels to help them meet their own de-carbonization goals. Our verdeX sustainable steels provide the best for our customers and the best for our planet.

Customers can convert today's steel orders into a sustainable, alternative and begin to market the green endless recyclability of the US Steel verdeX sustainable solutions. Customers are looking to partner with the right suppliers. By offering tomorrow's sustainable steel today, we can help them get to their future faster.

Today, US Steel is offering our customers an opportunity to turn pledges into action by utilizing our new verdeX line of advanced sustainable Steels. We look forward to boldly partnering with those that share our vision value, our differentiated customer value proposition..

Thanks Rich. Our verdeX sustainable steel is just one of many announcements this year that reinforce our industry leading sustainability proposition. The proof points on Slide 9 build off our 2019 announcement to reduce global greenhouse gas emissions intensity by 20% by 2030 versus a 2018 baseline.

We put our money where our mouth is by acquiring Big River Steel, the only LEED certified steel mill in the United States and perhaps anywhere in the world. Next, we announced our line of sustainable steel solutions so that we can partner with current and future customers as they meet their own de-carbonization goals.

And just last week, we expanded our commitment to sustainability by setting an ambitious 2050 net zero carbon emissions goal.

Our 2050 goal announced last week is the catalyst to take our best of both strategy to the next level with a best for all strategy, not just best for investors, best for customers, best for our employees, but best for the communities where we live and work and best for our planet.

To reinforce our commitment to sustainability, we became the first North American based steel company to join Responsible Steel, the industry's first global multi stakeholder standard and certification initiative. Net zero carbon emissions is a big hairy audacious goal or BHAG of this generation.

That is why we announced our ambitions to achieve carbon neutrality by 2050. We aspire to be part of the solution. Achieving this goal won't be easy. It requires us to re-imagine the way we work, how we make steel, how we amaze and delight our customers, and how we allocate capital. That means we have to make hard decisions. Let's turn to Slide 10.

Today we're announcing one of those difficult decisions, one of those difficult choices. With a clear vision for our future we have evaluated how we allocate capital through the lens of sustainability, value creation, and lower capital and carbon intensity across the footprint.

When facts change, we must change and as we step forward to meet the needs of a rapidly changing world, we must set aside the Mon Valley endless casting and rolling and cogeneration project. This is not a decision we took lightly. But the events of the last year gave us the opportunity to reevaluate our capital allocation priorities.

Based on today's best of both footprint and the global call to action of the emerging climate crisis, we know that this difficult decision is the right one for the business. To be clear, the Mon Valley remains a structurally competitive steelmaking asset in our portfolio.

It is our lowest cost steel making facility in our flat-rolled segment with advantaged logistics and energy costs. The Mon Valley will continue to serve strategic markets, including appliance and construction customers.

We're also evaluating our coke making footprint and are announcing that we plan to permanently idle batteries one through three, and our coke making operations by first quarter 2023. This timeline provides the opportunity to limit workforce impacts through regular attrition..

Thanks Dave. I'll begin on Slide 11. In the first quarter, we were busy strengthening the balance sheet and restoring financial flexibility. In total, we reduced US Steel level debt by $1.2 billion. And as a result, we lowered our annual run rate interest expense by $100 million.

We restored secured debt capacity at the US Steel level by redeeming all of the 12% senior secured notes due 2025. And we extended our maturity profile by issuing 750 million of unsecured senior notes due 2029 to refinance near term debt.

The progress we've made in advancing our best of both strategy gives us an opportunity to prioritize and better define capital allocation. The business is performing well. And having the right capital allocation strategy as critical to delivering on our near term and longer-term strategic goals.

In the first quarter, we took significant steps to enhance the balance sheet. In the second quarter, we believe we have the opportunity to further deleverage.

As you will see in our 10-Q disclosure we have already completed additional deleveraging actions in April, including open market repurchases of our 2025 and 2026 notes of approximately 32 million and approximately 60 million repayment our USSK Credit facility and a 30 million repayment on the Big River Steel ABL facility today.

In addition to the actions already taken in the quarter, we currently plan to opportunistically repay at least $500 million of additional debt and could increase that amount as the year progresses.

As we think about potential investments, we have a bias for organic growth and existing competitive advantages and assets with strong strategic fit, and investments that support our transition to a best for all future and drive lower capital and carbon intensity..

Thank you, Christie. Let's recap today's prepared remarks on Slide 13. First, our optimism for a stronger for long environment is confirmed. First quarter performance was strong and the second quarter will be even stronger. Second, Big River's performance confirms the flexible optionality that a best of both footprint creates.

And third, our sustainability leadership role in the United States is confirmed. We have the most recognizable brand in the industry. And we now have the biggest voice in the industry about the opportunity sustainability means for steel. Kevin, let's move to Q&A..

Thank you, Dave. We ask that you each please limit yourself to one question and a follow up. So everyone has the opportunity to ask a question.

Operator, can you please queue the line for questions?.

Absolutely, thank you very much. And we'll get to our first question on the line from Karl Blunden with Goldman Sachs. Please go right ahead..

Hi, good morning. Thanks for the time. You made some interesting comments about capital allocation and the debt pay down. Just on that front. I was interested in the tradeoffs between using liquidity to pay down debt. So it may sound like you're going to reduce debt rather than replace it with some new debt.

And then how that fits in relative to some investment options you have outside of the Mon Valley, of course. And then also in the last up cycle in 2018, you did do some cash payments to shareholders through buybacks, so just interested in the balance between those things..

Yeah. Thanks very much for that question, Karl. I'm going to make a comment, and then I'll pass it to Christie for more information. I think, first priority here is, of course, to make sure we keep this resilient balance sheet.

We're obviously in a much different place than what we were a year ago, and won't be long before people will be asking us, what are you going to be doing with all that cash because we do have so much optimism for 2021 and beyond. But more specifically to your questions, maybe Christie can provide a little bit more..

Okay. Yeah, so we have very clear priorities for the cash that we expect to be generated from the increased earnings in 2021. As we've often said, our first priority is to make sure we have a more resilient balance sheet. We believe that that will create a foundation to support future growth.

And our guiding principles when we think about our capital structure, is to maintain strong liquidity, financial flexibility, and make sure we have a supportive maturity profile. We also like investments, so that advance our best of both strategy.

And we like investments that are - and existing competitive advantages, and assets that have a strong strategic fit. We also like investments that now are aligned with our sustainability objectives. You've heard our recent industry leading sustainability announcements. And these also are informing our future investment decisions.

Obviously, we're targeting investments that lower our capital intensity, our carbon intensity and that are aligned with our 2050 net neutrality target..

Thanks Christie. So very clearly, it's about the balance sheet, making sure we're in a good position on our balance sheet. There's going to be more action to make sure that we have that de-levered. And then we do have some opportunities with our best of both strategy to create value for our stockholders..

Got you that's helpful. Yeah, I didn't hear much there about shareholder return. So maybe I'll assume that's on the back burner for now, just shifting to your comments on sustainability, in some ways point to focus on electric arc furnaces and the investment in Big River, so I just wanted to focus in on that.

There was great, great performance from an earnings standpoint, from the Big River asset in the quarter. There was a little bit more production from HRC than we're typically seeing there. Yeah, some of that maybe represents the price and margin opportunity.

But has anything changed there in terms of what you're thinking long-term mix from that mill should be?.

No, Karl this is Kevin. I think that what you saw in the mixed profile of Big River in the first quarter does indeed confirm the exposure that they have to this strong environment.

I think you've heard us talk though, about in the medium to longer term transitioning some of those previously integrated only grades of steel to Big River where it makes sense to leverage their lower carbon footprint and to leverage our proprietary steel lines as we think about coming to market with our verdeX line of steel.

So as that accelerates as we continue to engage with customers, in all of our end markets about what sustainable steel solutions like verdeX could mean for their business you could see a change in that mix.

But we will continue to run Big River, prioritizing profitability per minute on the line to ensure we're driving the right margin performance, the right EBITDA per ton performance and continue to generate value from that asset.

So the phase two expansion naturally creates a bit more HRC in the ramp up, but I think we'll have the ability to optimize as we continue to progress with the integration strategy execution. But I'll pass on to Rich for some additional color as well..

Yeah. Thanks Kevin. I think one of the things to keep in mind too, as we as we move through the integration of Big River, that mill was built with capabilities that are pretty unique for a mini mill, for example, they have an RHD gas or most mini Mills have vacuum D-Gassers.

That capability is something our US Steel technical experts are working on with the Big River operators. And I think over time, you'll see the ability to make even higher end products is that D-Gasser comes online and really gets optimized. So I think there's more to come.

And as Kevin said we've got - expanded on the 14 grades that have been trialed successfully. We're working with customers on qualification of the verdeX line of products. And there's more to come, more opportunity over time to move up the margin in the mix..

I think obviously, this is a new acquisition for us. We're learning a lot how this works.

But if you get back to the best for both and then - best of both and then best for all, to Rich's point with this D-Gasser we're able to take the background, the experience the knowledge from US Steel and help work on that D-Gasser and at the same time, the nimbleness that Big River Steel is able to operate the entrepreneurial spirit, we're touching that virus with the integrated mills.

So it really does play off one another and while you have a lot of issues when you first acquire a business, I can say for the most part, it's gone pretty well.

And we understand what a great asset that Big River Steel has been to our portfolio especially so early on, and we expect it to get better and what that mix of products going to be is all going to be dependent upon how fast we can move with verdeX, with our 17 pre-qualified products and on and on.

So there's a lot of opportunity and as we said at the opening, we want to make sure we keep that optionality open so that we can leverage US Steel integrated with the minimal capabilities of Big River Steel..

Thank you very much. We'll now proceed to our next question on the line from the line of David Gagliano from BMO Capital Markets. Please go right ahead..

Hi, thanks for taking my questions. I actually just wanted to follow up on the capital allocation question. Obviously, with the cancelling of the Mon Valley project and where prices are there's, as you mentioned quite a few options here and clearly the focus is on debt reduction, liquidity and investments.

Rather than assuming is it reasonable to assume or what is the policy towards cash returns to shareholders specifically?.

Yeah, well, I think is the way to think of this first off David as you get to the Mon Valley, and you think about that again, the capital allocation in terms of what we're - where we're putting the money, you can pretty much go pencils down on the 1.3 billion that remains at Mon Valley that is not going to be spent, we have the endless caster that's the largest portion of that has been built and so we have optionality with where that might go.

So as far as CapEx spend for the balance of this year, we'll still be at the 675. But I would expect in the short-term here to continue to have outsized returns. And as we sort through this new footprint that we're putting together; I think we'll see outsize through cycle improvements in our margins.

And frankly, we're figuring that out as we work through with big river and what those next steps are, and I just have to say more to come..

Okay, all right.

And then when you look at investments, are you talking more about organic growth, specifically steelmaking? Or are you talking about acquisitions?.

Well, I - what we've said I think is our preference is for organic growth, use our existing footprint and look for those advantaged assets whether either have a cost advantage or a capability advantage and spend the money there, expand the money there, grow the opportunity at Big River Steel for example, and see what's possible.

As we continue this path of best of both looking at the integrated, look at the mini mills, we'll find where that least capital intensity the highest optimized through cycle profitability is..

Thank you very much. And we'll now proceed to our next question on the line from the line of Seth Rosenfeld with the Exane BNP. Please go right ahead..

Good morning. Another question focused again on capital allocation, but it's kind of the de-carbonization strategy and obviously, you've leapfrogged some of your US peers, announcing quite aggressive de-carbonization target over the next couple of decades. I observe a lot remains to be confirmed with regard to technology change.

When you think about what's happened at Mon Valley, how do you consider the broader transition towards more EF capacity and also considering things like DRI and hydrogen, I think DRI was included in your announcement from last week? What scale of CapEx are you going to bracing for over the next decade or so? And do you think that US Steel can fund this on your own or would be interested in working with partners to drive that de-carbonization push from a CapEx side?.

Well, there's certainly a lot in that question. And there's a lot of work for us to get to this 2050 goal. And this BHAG we talked about and there's really the three categories that will be impacted.

It's how we make steel, who we partner with to achieve those common goals and who's going to line up with us to help us get there and then where we allocate the capital. So if you think about it in those three categories, that's where we have to figure it out. And again, our goal is to make sure we're the least capital-intensive organization possible.

As we make this transition from integrated mini mill to best for all, but as far as the actual specific expenditures over the next 30 years, the next 20 years, obviously, across the whole industry, steel industry, it will be billions of dollars, and it won't be just all the individual companies, it will be countries and companies and competitors collaborating.

If you think about the BHAG thing, it's one of those things that it's so big, it's so immense, it's going to take collaboration, even with competitors, to find the breakthroughs as to how to make steel and cement and de-carbonize the planet. So there's a lot of thinking that has to go into this. We're in the beginning phases.

We've been first out in terms of setting the goal because we know it's necessary for the planet. But as far as the opportunity and where those funds come, you have to wait and see - we have to wait and see. And we have to develop those partnerships.

As we saw with COVID-19 and the collaboration that we saw across competitors to develop the vaccine, there's going to be that kind of collaboration over time. And we're going to have to have our suppliers' pay, our customers pay, that governments' pay, our counties pay for those types of improvements that have to be made.

Now, how that gets divvied up. It's going to be up to the markets and the policymakers to decide. Thank you..

Thank you. And just one follow up simply on Mon Valley. Can you just again, walk us through the development to date on the caster? In your earlier comments I think you said that that could be allocated to a different facility.

Can you clarify? And again from Mon Valley any update on future volumes given the changes in CapEx?.

Yeah, on that we spent on the Casio, about $170 million, and I think going toward the $250 million. So we have equipment in storage that could be repositioned elsewhere. And where that's going to be positioned? Of course, that's under study. And what was the second part of your question,.

Dave, I believe Seth was asking about the production at the Valley without the - with the capital expenditures. And this investment Seth just as a reminder was never to expand capacity of the Mon Valley.

So we expect that the capabilities of that facility from a volume perspective will be unchanged on a go forward basis and will continue to serve quality steel to our strategic end markets like construction and appliance, so no change in that regard..

Thank you. We go to our next question on the line from Sathish Kasinathan from Deutsche Bank. Go right ahead..

Yeah, hi, thanks for taking my questions. So given that you have had Big River for over three months now, can you talk about the synergies that you've identified and maybe quantify it for us please.

Also with the lower utilization in 1Q, were there any one-off costs related to the weather or ongoing ramp in 1Q and how much volume improvement should we expect into 2Q?.

Sure. So Sathish, this is Kevin. Let me address the second part of your question first, and then I'll hand it over to Rich to talk a little bit about the progress we've made on the integration of Big River into US Steel.

So on the utilization rate, I think it's really important for everybody to understand how we look at loading that facility and consistent with our prior remarks. It's not just about how much steel you can make. It's about how much money you can make per minute of line time that you have.

So while you see utilization rates may be trending a bit lower, that's really a function of some of the mix and how we choose to allocate line time in order to maximize profitability. So while there were some weather disruptions in the middle of the quarter that impacted production.

We feel like the utilization rates we had the way we loaded the facility in the first quarter, the products we chose to make and sell into the marketplace were the right ones. And I think that's validated by the 32% EBITDA margin performance and the $362 a ton of EBITDA generated at Big River. So let's look at utilization made with a grain of salt.

It's a secondary measurement at least for the mini mills segment in our view, and what we should be focused on is the EBITDA margins and EBITDA per ton. But Rich if you want to maybe elaborate on the synergies and the lessons learned thus far..

Yeah. Thanks, Kevin. I think Big River is the cornerstone of the best of both. And what you see with big river, is what we've always thought it would be, which is we're using the know how the proprietary substrate technology that US Steel has, plus our deep customer relationships and leveraging those with Big River's process, expertise.

And that's under the verdeX umbrella of product opportunities for green steels plus other areas. So there's value coming from that. And I think on a more precise and specific value, that capture we've had is with respect to our scrap sourcing, I think Dave touched on it.

We've been able to optimize scrap sourcing by sending some of our high quality prime scrap generated internally at our integrated footprint to Big River Steel to offset their scrap purchase needs to some degree. So that saved about $5 million through April, and we expect that to continue.

We talked a little bit about the RHD gas already and the opportunities there to come. So we're seeing a lot of great opportunities. We're capturing some value already. And we think there's a lot more to come..

Okay, thank you.

Just as a follow up, in the last earnings call, you mentioned that you're nearing additional third-party pellet agreements, any update on this?.

So Sathish, I think we've continued to make really good progress, monetizing our iron ore position, which includes selling those into the kind of the third-party market. We haven't disclosed any new agreements.

But I think everybody should be confident that we continue to find opportunities that are EBITDA positive for our business and opportunistically sell into the market leveraging our low-cost iron ore position. So that's an active part of the strategy that we continue to execute against..

And I'd add record high prices, IDEX is hitting new records..

It's been a good revenue stream for us this year for sure being able to sell on the open market..

Thank you very much. I will now proceed to our next question on the line from the line of Timna Tanners with Bank of America. Go right ahead..

Yeah. Hey, good morning, guys. I wanted to ask a bunch about the second quarter. But I'm kind of stuck on this Mon Valley announcement. So I wanted to ask my first question really about that.

When it was announced, a couple of years ago, it was described as game changing, really crucial and so I'm still kind of trying to understand what it means to not have that project. And I know at the time, you also said that it was over an 82-year-old hot sheet metal that had to be replaced.

So can you just help us understand what not having that update does for Mon Valley? And you also said it was a critical operation? So can you help us reconcile that please?.

So Timna this is Kevin. So I think when we disclosed this project two years ago, we were taking a very good facility and increasing its capabilities, so that very good facility that was serving as the foundation for this investment remains in place.

And we were talking about potentially transitioning to different strategic markets based on the technology the endless casting and rolling we provide.

However, we remain very confident that the existing capabilities at the Mon Valley will allow us to compete in the end markets that the Mon Valley has always served and has served at high levels of profitability going forward and those include appliance, construction, service centers, et cetera.

So, I don't think that going forward this will have a material impact on the existing performance of the Mon Valley, which is our lowest cost producer, which is our - one of our most efficient operations and is one of our most profitable facilities within the flat-rolled segment.

So we were obviously showcasing and highlighting back during the announcement, some of the capability increases that would be made. But going forward, we're highly confident the existing operations at the Mon Valley mean. We just started a blast furnace outage there today for 25 days to make some investments in the blast furnace.

So we remain committed to that facility. Going forward, we'll continue to allocate capital towards it. And we continue to believe it'll generate strong earnings and strong cash flow for the business..

Okay, thanks for that.

And then looking forward, if I could on the margins for your blast furnace operations, just thinking about the margin structure costs were a little bit higher in the first quarter than we expected, so just wondered if you could provide any detail on cost inflation that you're seeing? And then similarly, along the lines of the margin opportunity going forward, in the past, when prices spiked, there was some revisiting of contracts for annual customers.

Obviously, they've got a pretty good price relative to the spot market lately. And just wondering if there's any talk of revisiting any contracts? Thanks a lot, guys..

Yeah. Sure. Thanks, Timna. So I mean, from a quarter-over-quarter perspective in the first quarter, one thing to always be mindful of is the seasonal impacts on the mining operations, which certainly mature this quarter.

Obviously, scrap on the raw material side is a headwind for the - to the flat-rolled segment, as we highlighted in our quarter-over-quarter bridge charts. And then we had some other cost, including kind of variable comp and things like that that the business always encouraged in the first quarter. That also was a headwind, quarter-over-quarter.

Going forward in this type of environment, we - the good news about and the great thing about our commercial strategy is that we're negotiating contracts really throughout the year. We have some contracts that are more heavily weighted to earlier in the year.

But nonetheless, we have the opportunities to engage with our customers throughout the year on fixed price contracts, and we'll continue to do so. So we keep those discussions between us and our customers. But we're optimizing the way we engage. We negotiate contracts every quarter of the year.

And that'll continue to be the case in 2021, so more to come on that..

Thank you very much. We'll proceed with our next question on the line from Andreas Bokkenheuser from UBS. Please go right ahead..

Thank you very much. Just switching away from Mon Valley towards Granite City for a moment, you've previously said that you obviously operate your blast furnaces based on your overall order flow, not necessarily on high prices. But there's obviously been a lot of talk about demand being strong and growing.

And you mentioned it yourself Tubular's doing better and rig count is doing better.

Can you just remind us - because blast furnace A is closed down, can you just remind us what is the stages of blast furnace A? How quickly could we start it up? What kind of markets this is usually services at energy? And if you have any kind of updated thinking on that that would be great. Thank you..

In the current market environment, Granite City is operating very well to serve its existing customer base and maximizing earnings.

There's currently no plans to turn on blast furnace A, it's got great cost capabilities right now in terms of the markets that it's serving, so we think it's well positioned for now and again, no plans actually to add another blast furnace..

Okay, and is that a furnace that services the energy market typically? Or is it all over the place, different industries? I mean, what's holding you back from restarting the blast furnace A?.

Yeah, that's right Andreas. It typically serves the energy market. And so while the energy market's improving it's still below where it was a year ago. So I think that's an important consideration. So yes, exposure in the energy market and while the market starting to improve, it's still a pretty low level.

Tubular market in general continues to be impacted by high levels of imports. So we'll just - as Dave mentioned no changes to the footprint at this time..

That's very clear. Thank you very much. I appreciate your taking my question..

Thank you very much. We'll get to our next question on the line from the line of Carlos De Alba with Morgan Stanley. Go right ahead..

Yeah, thank you. Good morning, everyone. So you guys commented about the end market, particularly the auto sector.

We read your comments on page 19 of yesterday's presentation, but you're given the announcement that some of the automakers have made particularly Ford with very weak second quarter production rates on the back of the semiconductor problems that they're facing.

What can you elaborate on that regard then? What are you hearing from the auto customers? And how do you see your order booked in that end market?.

Well, obviously, the markets been impacted by the semiconductor the chips. This has gotten some global attention in terms of making the improvements, but for our business, and where we see ourselves now, we're in a good place. And in fact, I wouldn't be surprised if the second quarter would double the first quarter. I don't think that's unrealistic.

So clearly, the markets V shaped recovery, there's got to be some fits and starts and stops and all that kind of thing. But where we continue to be optimistic that it'll be sorted through, but it will probably take a couple years again, with our thesis of stronger for longer..

Understood, and then if I may just clarify a part of your response. We see - you wouldn't be surprised to double what you had in the first quarter.

Is that specifically in the auto sector?.

I would say just overall for the - though we had 551, we could see as much as double I don't think it's unrealistic to think that we would double EBITDA in the second quarter from the first quarter..

Alright, wonderful, great.

And then just coming back to the prior question from Andreas, how long can you take - can you keep Great Lakes, indefinitely idle without you maybe you completely decommission it and spend money to remediate the site? And right now, how much is the cost of keeping that plant that idle?.

Well, keeping the plant idle it's not a material amount at this point. If conditions were right, and they'd have to really change dramatically, because we don't see those blast furnaces coming on. We believe they'll be down indefinitely until we see more from our customers in terms of what they're willing to do with us.

And we still keep the finishing side that's operational. And that's a very good asset for us especially as it relates to the advanced high strength steel. So those facilities are operating fine in today's environment. And again we don't expect to turn on the blast furnaces anytime soon..

Thank you very much. We got to our next question on the line from Matthew Fields with Bank of America. Please go right ahead..

Hey, everyone. I'm loving the BHAG acronym. I haven't heard that one. My first questions on the Clairton announcement, just wanted to get a few sort of clarifications around it. So idling batter - permanently closing batteries 1, 2, 3.

If that's a 4.3 million facility with 10 batteries, is that about a 1.2 billion or 1.3 of capacity? And then is that is that capacity that kind of wasn't running and you're just consolidating kind of idle batteries anyway or is that coke that's coming out of the market? And then lastly, is there an environmental remediation charge associated with closing those facilities?.

Alright, Matt, so this is Kevin. Let me talk a little bit about Clairton, so 4.3 million tons of annual capacity at Clairton. Batteries one through three make up approximately 700,000 ton of that capacity about 17% of the overall production of Clairton. Those batteries are operating currently.

And as we said we are targeting Q1 2023 dates so that we can continue to serve customers further with third party coke, steelmaking operations and manage attrition. So that'll occur at the appropriate time in the future, but about 17% of the overall capacity of Clairton is made up of the one through three batteries.

Rich I don't know if you had additional comments about Clairton..

No, just as you said this was part of an alternative project that we agreed with the Allegheny County Health Department to execute..

And I'm sorry is there a remediation charge to permanently closing that? Any cleanup that has to be done or CapEx in that regard?.

No, nothing material Matt..

And then I appreciate Christie's guidance about debt repayment in the quarter and then the comments about paying down another 500 million opportunistically over the year. After you guys do that and pay down another 500 million.

Is that - do you feel like now you've got the balance sheet in a good place going forward and there needs to be no further debt reduction after that 500? Or do you still feel like there's more wood to chop on the balance sheet in '22 and beyond?.

Yeah, Matt, I think that Christie's remark sized 500 million is kind of the minimum opportunity in our mind that we plan to execute against in the near term, but we'll continue to evaluate the acceleration, the cash flow generation of the business to the extent that we think the time is right, and conditions are supportive, I think that there's likely an opportunity for us to increase that amount of de-leveraging.

So we'll continue to watch how the business performs. We'll continue to kind of maintain the resiliency of the balance sheet and ensure we have the kind of the right debt structure given the through - our view through cycle earnings of the business, and making sure it remains strong.

So I think it's the minimum and they're potentially to do - potential to do more through 2021 and beyond..

Yeah, we look at de-leveraging hasn't no regrets to decision. It just helps create a strong foundation for the future growth..

Thank you very much. Now, I would kind of call back over to US Steel CEO, Dave Burritt for closing comments..

Thanks everyone for your interest in US Steel. Before we conclude, allow me to take the time to thank employees for their continued focus on safety and on our customers. Today's strong steel demand environment has not distracted you from what matters most your safety and our promise to deliver quality products to our customers.

Year-to-date and 2021 you are maintaining near record safety levels achieved last year. Your actions and commitment to safety are the drivers to our continued strong safety performance. You've maintained that same level of commitment to serving our customers.

In the first quarter you achieved record low customer claims performance in both the flat-rolled and European segments. You also delivered record reliability performance in our flat-rolled segment. Your focus on safety and the customer continues to be a priority. Thank you. Now let's get back to work safely..

Thank you very much. And that does conclude the conference call for today. We thank you for your participation and ask that you disconnect your lines. Have a good rest of the day everyone..