US Steel has joined Australia’s BlueScope Steel in downgrading earnings amid weakening steel prices in America and around the world.
BlueScope said its expected June 30 full-year profit would be down around 10% from the February forecast, even though it would be up a touch from 2017-18’s figure.
On Tuesday, US Steel Corp forecast lower-than-expected second-quarter profit and said it was idling three blast furnaces in the US and Europe.
It’s a sign that Donald Trump’s 25% tariffs on steel imports into the US haven’t worked. (And BlueScope’s problems are underlined by the fact that its 300,000 tonnes a year of exports from Australia are exempt from the tariffs)
US Steel said it expects second-quarter adjusted earnings to be down around 20% (on an earnings per share basis at 40 cents) from the 51 cents a share estimates from what analysts had forecast.
The fall from what was actually reported last year is even more dramatic – 66% from the $US1.20 a share reported a year ago.
The company blamed falling prices for its flat-rolled business (the same problems reported by BlueScope) as well as softening demand from users. On top of that, the company (and its US rivals, including BlueScope) said second-quarter shipments are lower than it expected due to flooding in parts of the southern US because of the limited availability of barges to carry steel products to buyers.
The company also mentioned what it called “market headwinds” for its business in Europe (weak demand). U.S. Steel said it will idle two blast furnaces in the US and one in Europe to adjust to the market conditions.
The temporary closure of the three furnaces will cut steel output by up to 375,000 tonnes (over a full year). The cuts in the US start next month where the impact could see up to 250,000 tonnes of capacity cut, while in Europe the idling of the single furnace will cut up to 125,000 tonnes.USSteel said the furnaces would be restarted when “market conditions improve”. No measure for testing that phrase was given.
The shares rose 4.4% on the news but shares still down more than 20% so far in 2019 and 58% for the past 12 months.