NEW YORK U.S. Steel Corp. swung to a $78-million net loss in the second quarter due to decreased flat-rolled shipments, particularly from the lockout at its Lake Erie operations in Nanticoke, Ontario, along with falling line pipe prices.
"Results for our flat-rolled and tubular segments are projected to improve compared to the second quarter; however, we expect lower results from our European segment due to a planned blast furnace outage in the third quarter," John Surma, chairman and chief executive officer of the Pittsburgh-based company, said in a statement July 29.
The loss was bigger than the net loss of $73 million in the first three months of this year and in contrast to net income of $101 million in the second quarter of last year. Second-quarter sales of $4.43 billion were down 3.6 percent from $4.6 billion in the first quarter and 11.7 percent from $5.02 billion a year earlier.
Much of the sales decline was attributable to lower shipments and increased operating costs in U.S. Steels flat-rolled sector, particularly due to repairs and maintenance costs about $30 million higher than in the first quarter at its Gary Works in Indiana and its Lake Erie Works. The company also incurred a $70-million charge in idle facility carrying costs at its Hamilton and Lake Erie operations.
"We expect our flat-rolled segment results from operations to improve based on an increase in average realized prices, lower raw material costs, and lower repairs and maintenance costs, partially offset by reduced shipments," the company said.
Its tubular segment results also were lower than in the first quarter due to lower line pipe prices and continued "elevated" imports. However, the company said it expects this segment to improve in the third quarter due to an increase in supported anticipated drilling activity and decreased operating costs thanks to efficiencies related to higher production volumes.