US Steel reports Q2 loss, expects to stay in the red in Q3

US Steel Corp., the largest steelmaker in the United States, reported Tuesday a second quarter net loss of $392 million, compared to net income of $668 million in Q2 2008, on falling prices and shipments for its products.

The Q2 results constitute US Steel's second consecutive quarterly loss, though a narrower one than the $439 million loss the company reported for Q1. According to CEO John Surma, the company is unlikely to emerge from the red in the third quarter despite slightly improving conditions.

The Pittsburgh-based firm's sales plunged 68 percent in the second quarter from a year ago, to $2.1 billion. This figure represents a decrease of 23 percent from the first quarter of 2009. Shipments totaled 2.9 million nt, down 58 percent from Q2 2008 and down nine percent from the first quarter.

Commenting on the results, US Steel chairman and CEO John P. Surma said, "Our second quarter operating loss was in line with the first quarter as our order book and operating rates remained at very low levels, spot market prices declined and we continued to incur carrying costs for our idled facilities."

Commenting on the company's outlook for the third quarter, Surma said, "While we anticipate an increase in our third quarter operating rates from the extremely low levels of last quarter, we expect each of our segments to report an operating loss in the third quarter due to continued low operating rates, idled facility carrying costs and lower average realized prices.”

“There are some signs that the de-stocking cycle has ended in the North American and Central European steel markets as increased customer orders across almost all industry segments have resulted in an extension of lead times,” Surma continued. “We have begun to bring up idled facilities in line with customer demand and we have implemented price increases in our flat rolled and USSE (US Steel Europe) segments in the third quarter. Despite these signs of improvement, the outlook for overall demand remains uncertain and the timing and magnitude of sustained economic recovery remain difficult to forecast."

United States Steel Corporation is an integrated steel producer with major production operations in the United States, Canada and Central Europe and an annual raw steelmaking capability of 31.7 million net tons. The company manufactures a wide range of value-added steel sheet and tubular products for the automotive, appliance, container, industrial machinery, construction, and oil and gas industries.