On Thursday, US Steel reported a Q1 2012 net loss of $219 million, following a $211 million loss in Q4 2011 and Q1 2011 net loss of $86 million. However, adjusting for the $399 million after-tax loss on the sale of US Steel Serbia on January 31, 2012, US Steel had a profit of $110 million.
Commenting on results, US Steel Chairman and CEO John P. Surma said, "We reported a significant improvement in our operating results in the first quarter as compared to the fourth quarter, mainly driven by improved average realized prices and shipments for our Flat-rolled segment. Our Tubular segment had another strong performance reflecting the continued strength of oil-directed drilling."
After struggling to achieve profitability in its flats sector, US Steel's flat rolled segment recorded earnings from operations during Q1, largely as a result of higher prices and increased shipments. Q1 prices increased $23 per net ton to $764/net ton due to higher spot and contract prices. Shipments totaled 4.1 million net tons, the highest shipping level since Q3 2008. The raw steel capability utilization rate was 83 percent for the flat rolled segment, an increase from the Q4 rate of 75 percent, and its tin mill facilities are running close to full capacity.
Surma commented that there has been a recent increase in light gauge HDG and cold rolled coil imports arriving, that "from what we see in the market can't be fairly traded." Total steel imports in March reached the highest level since the recession, and there is definitely import concern, according to Surma. He also said some tubular imports from certain countries "must be unfairly traded based on input costs," but tubular margins were still good considering the import and oversupply situation.
Tubular Q1 results improved from Q4 2011 as the demand for oil country tubular goods and line pipe remained strong. Shipments of 529,000 tons represented a record quarterly shipping level and an increase of 10 percent from Q4 2011. Average realized prices increased slightly to $1,727 per ton. These increases were partially offset by higher substrate costs. US Steel said that end users continue to rebalance their inventory positions as oil-directed drilling continues to drive the rig count, while natural gas drilling is being negatively affected by high storage levels and low prices. In Q2, operating costs are expected to be lower due to reduced spending levels.