Oct. 27 (Bloomberg) -- U.S. Steel Corp., the largest U.S.- based steelmaker, reported its third consecutive quarterly loss as revenue declined amid a drop in global demand.

The third-quarter net loss of $303 million, or $2.11 a share, compares with net income of $919 million, or $7.79, a year earlier, Pittsburgh-based U.S. Steel said today in a statement. Sales dropped 61 percent to $2.82 billion.

The deepest U.S. recession in seven decades has cut demand for the metal used in construction and manufacturing. Results will improve in the fourth quarter because of increased demand for flat-rolled steel in North America, led by the auto industry, Chief Executive Officer John Surma said today. The company said it still forecasts an operating loss in the period due to low operating rates and costs for idled plants.

“There has been some concern producers will overproduce,” Luke Folta, an analyst with Longbow Research in Independence, Ohio, said today in an interview. “U.S. Steel made it clear they will be disciplined from a production standpoint.” He rates the shares “neutral” and doesn’t own any.

U.S. Steel fell $1.86, or 4.6 percent, to $38.72 at 9:34 a.m. in New York Stock Exchange composite trading. The shares increased 9.1 percent this year before today.

Excluding a 16-cent tax benefit and 1-cent gain from the disposal of assets, the company had a loss of $2.28 a share, beating the projected loss of $2.89, the average estimate of 13 analysts surveyed by Bloomberg.

Steel Prices

Steel prices in the U.S. gained about 41 percent in September from a five-year low in June as inventories declined. The nation’s steel output fell 45 percent this year through Oct. 24, according to the American Iron and Steel Institute.

The average U.S. price of hot-rolled steel sheet, the benchmark product used in cars and appliances, climbed to $535 a ton in September from $380 in June, the lowest since January 2004, according to the latest monthly data compiled by Purchasing Magazine. The product reached a record of $1,068 a ton in July 2008.

U.S. Steel has three main units: North American flat-rolled steel; tubular products; and Europe, where the company makes steel in Slovakia and Serbia for markets in central and Western Europe.

U.S. Steel is the last of the three largest American-based steelmakers by 2008 sales to report quarterly financial results, after No. 2 Nucor Corp. and No. 3 Steel Dynamics Inc. each exceeded analysts’ forecasts for sales and profit last week.

Nucor Losses

Nucor on Oct. 22 reported its third-straight quarterly loss as it continued to work through high-priced raw materials secured before the drop in global demand for the metal. Its loss of $29.5 million, or 10 cents a share, was not as wide as the average estimate for a loss of 15 cents from 14 analysts surveyed by Bloomberg.

Steel Dynamics said Oct. 19 it returned to profit after three straight quarterly losses as production and shipping volume of flat-rolled metal improved in the third quarter. Sales and profit, which were down from last year, both exceeded analysts’ estimates. Net income was $69 million, or 30 cents a share.

To contact the reporter on this story: Edmond Lococo in Boston at elococo@bloomberg.net.

Last Updated: October 27, 2009 09:49 EDT