Steel Mills
US Steel Reports Second Consecutive Quarter of Profits
Written by Sandy Williams
April 29, 2014
US Steel reported a net income of $52 million for the first quarter of 2014 on net sales of $4.4 billion, compared to net income of $270 million (adjusted net income of $38 million) in fourth quarter 2013. Shipments for the quarter totaled 4.1 million tons.
Flat rolled steel sales operating income in first quarter dropped to $85 million from $87 million in Q4 2013; US Steel Europe income was $32 million, up from $12 million quarter over quarter; tubular income fell to $24 million from 32 million the previous quarter. Higher contract and spot prices increased the average realized price of flat rolled to $761/net ton.
US Steel shipped 3,674,000 net tons of flat rolled steel, US Steel Europe shipped 1,031,000 tons of steel, and tubular shipments totaled 419,000 net tons (all increases from fourth quarter 2014).
Extreme weather conditions caused significantly higher natural gas costs as well as negatively affecting logistics and operating efficiency. Capacity utilization at flat rolled US facilities was at 83 percent, up from 73 percent in Q4 2013 and 82 percent in Q1 2013. Raw steel production for flat rolled totaled 4,491,000 net tons, up from 4,474,000 tons in Q4 2013, and down from 4,920,000 tons in Q1 2013.
Commenting on U. S. Steel’s outlook for the second quarter, US Steel President and CEO Mario Longhi said, “We expect reduced income from operations in the second quarter. We expect our production to be limited which will temporarily slow shipments primarily due to continued weather-related logistical issues affecting both raw materials and finished products.”
“We expect to report a loss for our Flat-rolled segment in the second quarter. The operational difficulties described above are projected to temporarily limit our production capabilities, resulting in a reduction in our shipments and higher operating costs as compared to first quarter. Market conditions in North America are improving; however, average realized prices are projected to be comparable to the first quarter. Given our production disruptions, second quarter shipments will be geared to fulfilling contract commitments where prices are not moving at the same rate as the spot market, as well as negatively influenced by lower automotive coated production and shipments this quarter. We expect to have the operational difficulties largely behind us as we exit the second quarter.”
SMU will have more on US Steel following the company’s conference call on Wednesday.
Sandy Williams
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