Pittsburgh, Pennsylvania-based United States Steel Corporation reported a Q2 2013 net loss of $78 million, compared to a Q1 2013 net loss of $73 million and a Q2 2012 net income of $101 million. In Q2 2013, net sales totaled $4.4 billion, down from $4.6 billion in the previous quarter and $5 billion in the same quarter a year ago.
US Steel's flat rolled segment reported a loss from operations of $51 million, compared to a Q1 loss of $13 million earnings of $177 million in Q2 2012. US Steel executives noted that flat rolled segment results were lower than the Q1 primarily due to increased operating costs and decreased shipments. The favorable effects from higher prices and lower raw material costs were more than offset by lower shipments. Demand, meanwhile, has been relatively stable, according to US Steel Chairman and CEO John Surma, Shipments decreased from Q1 primarily due to the maintenance projects and the continuing lockout at our Lake Erie Works that began on April 28, 2013. Lake Erie Works vote is anticipated to take place July 31. If approved, operations at the mill would restart as soon as possible, said Surma.
Meanwhile, US Steel reported a segment income of $45 million for its tubular operations, down from $64 million in prior quarter and $103 million in Q2 2012. Total shipments were higher due primarily to increased participation with strategic program customers. Average realized prices decreased reflecting lower prices for line pipe product, continued elevated levels of imports and OCTG mix effects. Surma noted that average realized prices receded to the lowest levels since 2011, and imports are causing ongoing price erosion.
Looking forward, US Steel expects its flat rolled segment results from operations to improve based on an increase in average realized prices, lower raw materials costs, and lower repairs and maintenance costs partially offset by reduced shipments. Average realized prices are expected to increase compared to Q2 due to increased spot market prices as well as a more favorable product mix. The outlook does not include any effects of a restart of Lake Erie Works.
Q3 results from the tubular segment are also expected to improve compared to Q2.
Shipments are expected to increase to support anticipated drilling activity and average realized prices are projected to be comparable. Operating costs are expected to decrease due to operating efficiencies related to higher production volumes.