April 26 (Bloomberg) -- U.S. Steel Corp., the largest U.S. producer of the metal by volume, reported a ninth successive quarterly loss after raw-material and retiree-benefit costs increased.
The loss narrowed 45 percent to $86 million, or 60 cents a share, from $157 million, or $1.10, a year earlier, the Pittsburgh-based company said in a statement today. That matched the estimate from David A. Lipschitz, an analyst at Credit Agricole in New York, while missing the 40-cent estimate of Luke A. Folta, an Independence, Ohio-based analyst at Longbow Research, according to a Bloomberg survey. U.S. Steel dropped as much as 4 percent in New York trading.
Retiree benefit-related expenses rose 61 percent to $71 million because of pension-plan asset losses in 2008. Prices for iron ore and coking coal, used in blast furnaces, jumped as Chinese demand climbed. U.S. Steel’s flat-rolled steel output was worse than expected because of disruptions related to cold, snowy weather in the Great Lakes region, said Mark Parr, an analyst with KeyBanc Capital Markets Inc. in Cleveland.
“If you look at the domestic flat-rolled side, they continue to have production issues,” Parr, who recommends buying U.S. Steel shares, said in a telephone interview.
U.S. Steel fell $2.11, or 4.1 percent, to $49.72 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 15 percent this year, making it the worst performer in Standard & Poor’s 500 Materials Index.
Sales gained 25 percent to $4.86 billion from $3.9 billion, matching the average of six analysts’ estimates in the Bloomberg survey.
The company said business from steel distributors will pick up as they sell their stockpiles.
“Service-center inventories are relatively low and our customers are tending to buy just what they need to sell,” Chief Executive Officer John P. Surma said on a conference call with analysts. “That means that they probably need to order at some point if their business continues to do pretty well, which I think they’re doing.”
U.S. Steel said in its earnings statement it expects to return to profitability in the second quarter as steel prices rise while its iron-ore and coal will be “relatively stable.”
Iron-ore prices in China, the largest user of the steelmaking ingredient, averaged $178 a metric ton in the quarter, 35 percent more than a year earlier, according to data from the Steel Index. Chinese coking-coal prices were up 14 percent, according to McCloskey data.
Hot-rolled steel coil, a benchmark product used in cars and buildings, averaged $645 a short ton in the quarter, 15 percent more than a year earlier, according to Metal Bulletin data. U.S. steelmakers used 76 percent of their production capacity as of April 18, the highest level in more than two years, according to the American Iron and Steel Institute.
AK Steel Holding Corp., the third-largest U.S. steelmaker, also reported earnings today. First-quarter net income climbed to $8.7 million, or 8 cents a share, from $1.9 million, or 2 cents, a year earlier, the company said in a statement. The average of 11 analysts’ estimates was for a loss of 1 cent. The shares rose $1.02, or 6.4 percent, to $16.96 in New York trading.
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