US Steel reports profit for first quarter after a year

Thursday, 29 April 2004 16:38:56 (GMT+3)   |  
       

US Steel reports profit for first quarter after a year

After four quarters which passed by with losses US Steel (USS), largest integrated steel producer in US, eventually reported profit with $58 million in the first quarter. Last year this figure was $38 million and $22 million loss both for the first and last quarter of 2003 respectively. In the first quarter, ended on March 31, revenues grew by over 55% compared to same quarter last year up to $2.9 billion. Growing demand and prices are believed to be the main reasons in achieving favorable results in the first quarter. Besides, operational synergies and cost reductions in the wake of National Steel acquisition which took place in the second quarter of 2003 provided benefit to the company's financial results as well. On the other hand improvements in results were partially offset by rising raw material costs. Shortage in coal supply keeps on disrupting USS's coke operations, capacity of which was reportedly 92% during the first quarter. USS is going to purchase around 240'000 tons of coke in the current quarter for its operations at pretty high price levels. Additionally, outage of a blast furnace, which was planned to take place later this year, is going to be sped up. Expectations of USS for the second quarter are that remarkable hikes in domestic prices will be much more drastic and lead to a better profitability. Also, strong demand is expected to continue and prices in Europe to pick up as supply will be insufficient and producers will try to offset their growing raw material costs. In general prices are expected to pass March levels. By the way, expected additional hikes in raw material costs such as coke are believed to lower positive effects of above mentioned expectations.

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