United States Steel Corporation (US Steel) reported Tuesday a net loss of $51 million in Q3 2010 compared to a net loss of $25 million in Q2 2010 and a net loss of $303 million in the same quarter last year.
Commenting on results, US Steel Chairman and CEO John P. Surma said "results for the quarter were lower than the second quarter as all three of our segments had lower shipments and production as activity in most of our markets slowed. Results were also affected by higher facility repair and maintenance costs, most notably for inspection and repairs of critical structures at our flat-rolled facilities, lower flat-rolled average realized prices, and higher raw materials costs in our flat-rolled and European operations."
The company reported a Q3 2010 loss from operations of $138 million, compared with income of $198 million in Q2 2010, and a loss from operations of $412 million in Q3 2009.
Income from operations for flat-rolled was lower than the second quarter 2010 primarily due to decreased shipments and production volumes, decreased average realized prices, increased costs for facility repair and maintenance, and consumption of higher cost coal, coke and iron ore purchased to support earlier facility restarts.
Average realized prices in Q3 2010 were $688/nt, a $12 per ton decrease from Q2 2010, as decreased spot market prices more than offset the benefits of increased contract prices. Shipments decreased by 6 percent to 3.8 million nt due to lower order rates, reflecting the lack of recovery in the construction markets and normal seasonal patterns. The raw steel capability utilization rate was 77 percent for the flat-rolled segment, 5 percent lower than in Q2.
Q3 2010 results for the tubular segment improved over the second quarter as the benefits of higher average realized prices and decreased costs for steel substrate were only partially offset by slightly lower shipments, which decreased by 3 percent to 422,000 nt.
Overall, US Steel expects its tubular segment to remain profitable in Q4, but expects lower results as compared to Q3.
Commenting on US Steel's outlook, Surma said, "our current order entry rates reflect the uncertain economic situation in North America and Europe, with spot customers reducing inventory levels in light of short lead times, while our contractual customers' order rates are consistent with traditional downtime taken late in the fourth quarter."