US Steel posts first loss since 2017

Integrated steelmaker US Steel posted its first loss in a year and a half as shipments at its European operations fell and prices for its products declined.

The company posted a loss of $84mn in the third quarter, swinging from a profit of $291mn a year earlier and its first loss since the first quarter of 2017.

The quarterly loss comes as European steel demand remains sluggish and prices in the US fall due to oversupply, outweighing US Steel's steady shipments in the US during the third quarter.

The company's European shipments fell by 31pc to 765,000st in the third quarter after its integrated mill located in Košice, Slovakia, idled its #2 blast furnace in July due to depressed market conditions.

Flat-rolled steel shipments from integrated steelmaker US Steel's domestic operations remained flat during the third quarter.

The Pittsburgh-based steelmaker shipped 2.65mn st of flat-rolled steel in the third quarter, just 5,000st less than the same period of 2018. The result came as it and the rest of the North American steel industry faced headwinds from declining prices and a 40-day strike at General Motors (GM), a major North American steel consumer.

Tubular shipments fell by 5.4pc to 174,000st, while total third quarter steel shipments, comprising US and Europe operations, fell by 8.9pc to 3.59mn st.

US raw steel production has remained at elevated levels in 2019 after Section 232 steel tariffs of 25pc were levied on steel imports into the US in March 2018. Production in the US has increased by 5.4pc to 73.58mn st in the nine months ending 30 September compared to the same period of 2018.

The Argus weekly domestic US hot-rolled coil (HRC) index rose to $490.50/st ex-works Midwest on 29 October, the first increase since 3 September. Prices are down by 18pc since early August, and by 34pc since the beginning of the year.

Raw steel production at US Steel's flat-rolled segment fell by 5pc to 2.78mn st in the quarter, while European raw steel production fell by 32pc to 823,000st from a year earlier.

Capacity utilization in the third quarter for US operations declined by three percentage points to 65pc, while European utilization fell by 31 points to 65pc from a year earlier.

Third quarter US flat-rolled pricing declined by 15pc to $732/st, while prices at its European operations fell by 1.9pc to $656/st. Tubular prices fell by 12pc to $1,417/st.

US Steel also said today that it had completed its $700mn purchase of 49.9pc of EAF steelmaker Big River Steel. The financial impact of the acquisition will be seen in its fourth quarter results.