U.S. Steel suffered larger-than-expected losses in the first quarter of 2016 — some $340 million for the three months, or $2.32 per share.
The company, in a conference call with industry analysts, reported Wednesday that it was hurt by continued low prices and decreased demand as well as a continued stream of foreign steel imports.
Industry analysts had expected a smaller loss per share.
The loss is up from $75 million in the first quarter of 2015. Revenues were down 28 percent from last year and total steel shipments were down 12 percent over last year.
The company lost a stunning $1.5 billion in 2015, but company leaders say they are poised to return to profitability as the U.S. government continues to take action to slap tariffs on unfairly traded foreign steel.
While conditions improved in recent months, with more steel mills producing more domestic steel, U.S. Steel joined most other domestic producers in saying the depressed oil industry coupled with cheap steel from abroad continues to eat into their business.
Company officials Wednesday said they don't have any plans for reopening their Keetac taconite iron ore mining and processing facility in Keewatin, which has been idled for a year with some 400 people on layoff. They said Keetac's future is tied to the future of oil industry steel pipe demand — or possibly sales to other steel companies.
Prospects look better for continued production at the company's Minntac operations in Mountain Iron, which is supplying the raw material for most of the company's still-operating steel mills.
"Our Keetac facility remains idled and the increased efficiencies at Minntac provide the lowest pellet costs for our current steelmaking requirements. Minntac can support the steelmaking facilities we are currently operating," the company said in a written report. "We would not expect to restart Keetac unless we restarted the steelmaking operations at Granite City Works or entered into long-term pellet supply agreements with third-party customers."
The Granite City, Ill. steel mill has been idle since December, with some 2,000 workers on layoff. Most of the steel produced at the mill goes to Texas, where it's made into steel pipe used in the oil industry — a market that has gone flat as oil prices have plummeted.
Sales to other companies
U.S. Steel officials said they may also seek to sell taconite iron ore pellets from Minnesota to other steelmakers, such as ArcelorMittal. That could help spur the reopening of Keetac, but it also could have a domino effect on other producers, such as Cliffs Natural Resources.
Selling ore to other steelmakers is "something we'd certainly be open to," U.S. Steel President Mario Longhi said in Wednesday's conference call. The company declined to say if it was involved in any negotiations for such sales.
Longhi said his company is the lowest-cost producer of taconite pellets in the U.S and that it could restart Keetac quickly if a contract is signed to sell ore.
Domestic steel production up
The American Iron and Steel Institute this week reported a little good news. Total steel production in the U.S. hit 1,684,000 tons in the week ending April 23, up more than 2 percent from the same week in 2015. Steel mill utilization hit 72 percent last week, up from 69.8 percent for the same week last year.
Source : duluthnewstribune.com