US Steel, USW reach tentative labor pact

The United Steelworkers International (USW) union reached a tentative labor agreement with US Steel today after months of negotiations that put workers on the brink of the first work stoppage in decades.

Neither the union nor the steelmaker released details of the four-year agreement, which remains subject to ratification by the 14,000 USW-represented employees at US Steel's domestic flat-rolled, iron ore mining and tubular operations.

US Steel workers in September voted to authorize the union's bargaining committee to call the first work stoppage since 1986 if no agreement could be reached. USW members will hold meetings in the coming weeks to review and discuss the tentative contract before casting votes to ratify the contract, the union said.

The labor deal lifts the threat of a strike and removes the risk of tighter domestic sheet supply that has been priced into the US hot-rolled coil market.

"This certainly takes away a talking point in negotiations with buyers," a competing producer said today.

The USW balked at a series of six-year contract proposals from US Steel that would provide for annual 3-4pc raises in base pay but that the USW said would almost double workers' healthcare costs.

The USW also continues to negotiate with steelmaker ArcelorMittal after its 12,000 workers in September unanimously authorized a strike if necessary.

An update from the union last week showed little signs of progress in disputes over health care coverage, bonus payments and other issues.

"Rather than constructively pursuing a settlement that would allow [...] workers to share in the gains of a strong American steel industry, ArcelorMittal management is provoking a work stoppage that promises to bring pain to the communities in which it operates," USW said.

Still, market participants expect ArcelorMittal to follow US Steel in reaching an accord with the union.

US Steel expects to earn nearly $2bn in 2018, up from $1.1bn in 2017 in what chief executive David Burritt has characterized as a "renaissance" for the company in the wake of a US tariff on imported steel that has boosted domestic producers.

The Pittsburgh-based producer has been among the most buoyant in its support for the Trump administration's action to limit foreign steel imports, restarting two idled blast furnaces at its Granite City, Illinois, sheet mill that prompted a celebratory visit from President Donald Trump in July. Its contract proposal to the USW included a commitment to restart construction of a 1.6mn st/yr electric arc furnace (EAF) at its Fairfield, Alabama, works.

"This group of workers stood up to a hugely profitable company and demand a piece of the success they helped create," USW vice president Tom Conway said today.