United States Steel Corporation Tuesday reported a second quarter 2010 net loss of $25 million. These results reflect a considerable improvement over the net losses of $157 million in the first quarter of 2010.
Commenting on results, US Steel Chairman and CEO John P. Surma said, "Operating results improved significantly from the first quarter of 2010. Sequentially, the most notable improvement was in our Flat-rolled segment, which benefitted from increased average realized prices and healthy order rates in most of our markets. In Europe, we had our second consecutive profitable quarter, and our Tubular segment income from operations more than doubled as compared to the first quarter of 2010."
The company reported second quarter income from operations of $198 million, compared to a loss from operations of $57 million in the first quarter of 2010.
As of June 30, 2010, US Steel had $947 million of cash and $2.5 billion of total liquidity as compared to $1.4 billion of cash and $2.9 billion of total liquidity at March 31, 2010.
Flat-rolled results improved significantly from the first quarter 2010, primarily reflecting the benefits of increases in average realized prices, as well as higher trade and intersegment shipments, lower energy costs and increased production volumes.
Second quarter 2010 results for US Steel Europe (USSE) improved slightly compared to the first quarter of 2010 as the benefit of increases in euro-based transaction prices was substantially offset by increases in raw materials costs. Shipments decreased by nine percent to 1.4 million tons due to reduced spot market customer order rates midway through the quarter. Reported average realized prices increased by $73 per ton to $687 per ton. USSE operated at 89 percent of raw steel capability for the second quarter, slightly higher than the first quarter.
Second quarter 2010 results for Tubular improved significantly from the first quarter of 2010. The benefits of increases in average realized prices and higher shipments were only partially offset by increased costs for steel substrate, most of which is supplied by the Flat-rolled segment. Shipments increased 40 percent to 433 thousand tons and the reported average realized price for the segment increased by $107 per ton to $1,496 per ton. Operating rates continued to increase throughout the quarter in line with demand trends, particularly for alloy oil country tubular goods (OCTG).
Commenting on US Steel's outlook for the third quarter, Surma said, "We expect to report an overall operating profit in the third quarter as the US and European economies continue to work their way through a gradual and uneven recovery process. Operating results are expected to be below the second quarter largely due to a decrease in shipping and production volumes for our Flat-rolled segment, reflecting slower order rates, primarily from spot market customers thus far in the quarter, which likely includes some normal seasonal variations and the impact of shorter lead times; however, reported carbon flat-rolled inventory levels on a months-of-supply basis at North American service centers remain below historical averages and end user demand appears stable. Similar market conditions prevail for our European operations."
Third quarter 2010 results for Flat-rolled are expected to be near break-even levels due to lower trade and intersegment shipments and production volumes, and increased costs for raw materials and energy.
Third quarter results for USSE are expected to be comparable to the second quarter as the benefits of higher euro-based transaction prices are offset by increased raw materials costs.
Third quarter results for Tubular are expected to improve as compared to the second quarter. The benefits of higher average realized prices and decreased costs for steel substrate are expected to be only partially offset by the impact of lower carbon OCTG and welded line pipe shipments.