US Steel Expects Higher Flat Rolled Steel Prices & Shipments
United States Steel Corporation reported fourth quarter 2011 earnings with a net loss of $226 million compared to a previous positive quarter. However, the quarter was still above 4Q10’s loss of $249 million. For total 2011, USS reported a net loss of $68 million, down from 2010’s net loss of $482 million, according to the company’s report.
Commenting on results, U. S. Steel Chairman and CEO John P. Surma said, "Our operating results for the fourth quarter included another solid performance by our Tubular segment reflecting the continued strength of oil-directed drilling. Our Flat-rolled segment incurred a loss from operations due to soft steel market conditions during most of the quarter, increased costs related to planned maintenance outages and accounting losses on transactions to sell excess iron ore pellets. U. S. Steel Europe results continue to reflect the difficult economic situation in the region."
The Flat-rolled segment saw a loss from operations for the fourth quarter at $24 per ton, down from a positive $53 per ton the previous quarter due to lower prices and shipments from sluggish demand. Fourth quarter prices dropped $32 per ton to $741 per ton. Maintenance outages and approximately $20 million in costs related to the new Hamilton Works labor agreement and restart costs added to the loss. The raw steel utilization rate was 75% in the fourth quarter.
U. S. Steel Europe also saw soft demand in the fourth quarter along with lower volume and shipment. European raw steel utilization rates were at 65% for 4Q11. USS sold U.S. Steel Serbia, effective January 31st, to the Republic of Serbia to cut their losses quickly.
The tubular segment remains strong from the third quarter with average prices increasing to $1,711 per ton and shipments of 482,000 tons for the fourth quarter.
Surma expects the first quarter to have better operating results, driven by higher flat rolled spot and contract prices as well as shipments. He also said the tubular sector is expected to be in line with 4Q11 results, while the European segment might continue struggling. The “European spot market prices appear to have bottomed and are expected to increase throughout the remainder of the quarter; however, contract prices are expected to decrease compared to the fourth quarter,” according to the report.
Source: U.S. Steel