As a result of the invasion, governments around the world, including the European Union (EU) and the United States of America (U.S.), have enacted sanctions against Russia and Russian interests. We are complying with all applicable sanctions that impact our business.
USSE purchases certain raw materials from sources that procure supply from Russia, including natural gas and iron ore. Since the onset of the war, and before, USSE has been building its inventory of iron ore and coal and procuring them through alternate sources. Current levels of iron ore and coal are sufficient to serve customer demand in the third quarter.
Net sales by segment for the three months and six months ended June 30, 2022 and 2021 are set forth in the following table:
Selling, general and administrative expenses
In December 2019, U. S. Steel announced that it would indefinitely idle a significant portion of Great Lakes Works due to market conditions including continued high levels of imports. The Company began idling the iron and steelmaking facilities in March 2020 and the hot strip mill rolling facility in June 2020.
As of June 30, 2022, the carrying value of the idled fixed assets for facilities noted above was: Granite City Works Blast Furnace A, $55 million; Lone Star Tubular Operations, $5 million; Lorain Tubular Operations, $65 million; and Wheeling Machine Product's production facility, immaterial.
% Six months ended June 30, % (Dollars in millions)
Items not allocated to segments:
Total earnings before interest and income taxes $ 1,254 $ 1,034
(a) Mini Mill segment added after January 15, 2021 with the purchase of the remaining equity interest in Big River Steel.
Average realized steel price per ton $ 1,339 $ 1,078
Gross margin for the three months ended June 30, 2022 compared to the same period in 2021 decreased reflecting increased input costs, partially offset by the impact of higher realized prices.
Gross margin for the six months ended June 30, 2022 compared to the same period in 2021 increased primarily as a result of higher average realized prices, partially offset by increased input costs and lower sales volume.
Segment results for Mini Mill (a)
Average realized steel price per ton $ 1,331 $ 1,207
(a) Mini Mill segment added after January 15, 2021 with the purchase of the remaining equity interest in Big River Steel.
Gross margin for the three months ended June 30, 2022 compared to the same period in 2021 decreased primarily as a result of increased material costs, partially offset by the impact of higher realized prices.
Average realized steel price per ($/ton) $ 1,217 $ 905
Average realized steel price per (€/ton) € 1,142 € 750
Gross margin for the three months ended June 30, 2022 compared to the same period in 2021 increased primarily as a result of higher average realized prices, partially offset by higher raw material and energy costs and lower sales volume.
Gross margin for the six months ended June 30, 2022 compared to the same period in 2021 increased primarily as a result of higher average realized prices, partially offset by higher raw material and energy costs and lower sales volume.
Gross margin for the three months ended June 30, 2022 compared to the same period in 2021 increased primarily as a result of higher average realized prices and sales volume.
Net interest and other financial costs
Net Cash Provided by Operating Activities
As shown below our cash conversion cycle for the second quarter of 2022 increased by 6 days as compared to the fourth quarter of 2021 primarily from increased inventory days due to increase in raw material inventory.
The last-in, first-out (LIFO) inventory method is the predominant method of inventory costing for our Flat-Rolled and Tubular segments. Based on the Company's latest internal forecasts and its inventory requirements, management does not believe there will be significant permanent LIFO liquidations that would impact earnings for the remainder of 2022.
Net Cash Used in Investing Activities
Net Cash Used in Financing Activities
U. S. Steel's contractual commitments to acquire property, plant and equipment at June 30, 2022, totaled $2.128 billion.
The following table summarizes U. S. Steel's liquidity as of June 30, 2022:
Environmental Matters, Litigation and Contingencies
U. S. Steel has incurred and will continue to incur substantial capital, operating, and maintenance and remediation expenditures as a result of environmental laws and regulations, related to release of hazardous materials, which in recent years have been mainly for process changes to meet the CAA obligations and similar obligations in Europe.
EU Environmental Requirements and Slovak Operations
For further discussion of laws applicable in Slovakia and the EU and their impact on USSE, see Note 21 to the Condensed Consolidated Financial Statements, "Contingencies and Commitments - Environmental Matters, EU Environmental Requirements."
New and Emerging Environmental Regulations
United States and European Greenhouse Gas Emissions Regulations
For further discussion of relevant environmental matters, including environmental remediation obligations, see "Item 1. Legal Proceedings - Environmental Proceedings."
U. S. Steel did not enter into any new material off-balance sheet arrangements during the second quarter of 2022.
The U.S. Department of Commerce (DOC) is managing a process in which U.S. companies may request and/or oppose temporary product exclusions from the Section 232 tariffs and quotas. U. S. Steel opposes exclusion requests for imported products that are the same as, or substitutes for, products manufactured by U. S. Steel.
In February 2019, the European Commission (EC) implemented a definitive safeguard on global steel imports in the form of TRQs that impose 25 percent tariffs on steel imports that exceed the TRQ limit, effective through June 2024.
The EC is conducting new AD investigations on imports of hot-dipped galvanized steel from Russia and Turkey, with a final decision expected this year.
U. S. Steel will continue to execute a broad, global strategy to maximize opportunities and navigate challenges presented by imports, global steel overcapacity, and international trade law and policy developments.
See Notes 2 and 3 to the Condensed Consolidated Financial Statements in Part I
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