United States Steel Corp. (X) is slated to report third-quarter results on October 27, with analysts expecting a loss of $2.87 per share, on revenues of $2.72 billion. In the prior-year period, the company reported earnings of $7.79 per share on net sales of $7.31 billion.
According to World Steel Association, apparent use of steel will contract worldwide by 8.6% to 1,104 mmt in 2009 after declining by 1.4% in 2008. This is an improved figure over the spring forecast issued in April 2009 which predicted a decrease of 14.1%, the association said. The improvement is largely due to the exceptionally strong growth in steel demand in China. With signs of a recovery, from the beginning of the second half of 2009, across the world now, apparent global steel demand in 2010 is forecast to grow by 9.2% to 1,206 mmt, which is a recovery to the level of 2008.
Daniel Novegil, Chairman of the worldsteel Economics Committee said, "The global recovery is stronger than we predicted in April. According to our current forecast, China will rebound 19% in 2009 and 5% in 2010. Emerging economies will slow down 17% in 2009, to grow 12% in 2010. Apparent steel use in developed economies, that contracted 34% in 2009, will rebound 15% in 2010. Therefore, worldsteel forecasts that global steel demand will return to growth in 2010 but this is expected to be moderate."
Apparent steel demand in the US is likely to fall by 38.7% to 60 mmt in 2009 after falling by 8.2% in 2008, and would probably rebound to 72 mmt in 2010 with a growth rate of 18.8%.
For the third quarter, United States Steel expects an increase in operating rates from the extremely low levels of last quarter, but anticipates that each of its segments will report an operating loss due to continued low operating rates, idled facility carrying costs and lower average realized prices.
Segment-wise, the company projects a sequential decline in flat-rolled products for the third quarter, reflecting lower index-based contract prices. In U.S. Steel Europe, results are estimated to be in line with second quarter, while third-quarter results for Tubular products are expected to show some improvement compared to the second quarter, mainly due to a slight increase in shipments as customers fill limited inventory needs for certain specialized products.
In the preceding second quarter, the Pittsburgh, Pennsylvania-based company incurred a net loss attributable to U.S. Steel of $392 million or $2.92 per share, compared to net income of $668 million or $5.65 per share in the prior-year quarter, reflecting significantly lower demand and prices for steel and related products amid the continuing global recession. Net sales plunged to $2.13 billion from $6.74 billion in the corresponding quarter of the previous year.
Among other players in the field, AK Steel Holding Corp. (AKS) is scheduled to release third-quarter results on October 27, with analysts expecting breakeven per share, on revenues of $1.03 billion. The company expects to report an approximate breakeven in operating profit for the third quarter, which would represent an improvement of about $70 million, or about $100 per ton, over second-quarter results. The company expects planned maintenance costs for the third quarter to be about $6 million lower compared to the previous quarter.
Another peer, Arcelor Mittal (MT) will publish its third-quarter results on October 28, as analysts are looking for a loss of $0.07 per share, on revenues of $16.30 billion. For the third quarter, ArcelorMittal expects EBITDA to be between $1.4 billion and $1.8 billion, and shipments to be slightly higher than in the second quarter, while average steel selling prices are projected to remain stable or slightly lower. In addition, the company expects additional cost benefits from raw material cost reductions in the third quarter.
Yet another competitor, Nucor Corp. (NUE) posted a third-quarter net loss of $29.54 million or $0.10 per share, compared to a profit of $734.59 million or $2.31 per share a year ago, impacted negatively by high-cost pig iron inventories as well as sharp declines in shipments and average sales prices. Net sales plunged 58% to $3.12 billion from $7.45 billion in the third quarter of fiscal 2008.
United States Steel shares, which have been trading between $16.66 and $51.65 in the past 52 weeks, closed Monday's trading session at $40.58, down 29 cents or 0.71%, on a volume of 11.9 million shares.
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