Brean Capital notes shares of SunCoke Energy (SXC) and Suncoke Energy Partners (SXCP) are moving lower today after U.S. Steel (X), the principal customer of their Granite City cokemaking facility, announced the temporarily idle of its own Granite City Works operations in order to consolidate its North American Flat-Rolled operations. Brean says that most importantly, SunCoke's Granite City facility has a take-or-pay contract which accounts for substantially all coke sales from the Granite City cokemaking facility with U.S. Steel through 2025. The firm believes that while U.S. Steel may request production to be scaled back, SunCoke would still be paid for any production U.S. Steel decides not to take. The firm views SunCoke's exposure to U.S. Steel's move as minimal and views today's pullback as an overreaction. It keeps Buy ratings on both SunCoke Energy and Suncoke Energy Partners with price targets of $22 and $29, respectively.

Says will continue to buy back stock "hand over fist." Says Cleveland-Cliffs (CLF) "the only U.S. solution" for U.S. Steel (X). Says will have to "re-assess value" of U.S. Steel. Says targeting net debt to EBITDA of 2.5x. Says balance sheet in "great shape, near record liquidity." Sees CapEx ~$1B/year from 2025-2028. Comments taken from Q1 earnings conference call.