Steel Mills

US Steel Expects Continuing Challenge from Imports

April 28, 2015

US Steel reported a first quarter net loss of $75 million–$65 million of which was due to the shutdown of coke production facilities. Net sales were $3.27 billion on total steel shipments of 4.1 million tons.

Commenting on results, U. S. Steel President and Chief Executive Officer Mario Longhi said, “Our results reflect extremely challenging market conditions, including the negative impact of the tremendously high levels of imports, which have contributed to reduced volumes and average realized prices. We have taken aggressive action to balance our operational footprint in the most cost effective way; however, we are maintaining our customer focus and our flexibility to respond quickly when market conditions improve.”

The flat-rolled segment results were negatively impacted by lower shipments, including to the Tubular segment, and lower steel prices. Results were pressured by “massive volume of steel imports that accelerated during the first quarter, many of which we believe are unfairly traded,” according the US Steel earnings report. Flat rolled steel shipments from U.S. facilities dropped to 2.6 million tons from 3.0 million tons in Q4. Average realized price was $768/ton compared to $775 per ton the previous quarter.

Tubular shipments were affected by reduced drilling activity and significant OCTG imports, some of which were unfairly traded.

In the 2015 outlook, US Steel said it expects “lower overall steel consumption levels to unfavorably impact the timing of a rebalance of supply chain inventory levels in both the flat-rolled and tubular markets.” Flat-rolled and tubular markets are expected to improve in the second half of 2015.

Full year 2015 adjusted EBITA is forecast in the range of $700 million and $900 million.

US Steel issued over 9,000 layoff notices in recent months to employees, many of which were in the tubular division that has been affected by heavy OCTG imports. At a shareholder’s meeting earlier today, Longhi said approximately 2,800 of those warned are actually out of work so far.

“We’re preparing for a stormy period ahead,” said Longhi. “I really don’t know how long it is going to last.”