U.S. Steel in Peer-Beating Rally as Import Curbs Contain Losses
U.S. Steel Corp. rose the most among major producers of the metal after quarterly results beat analysts’ estimates as government steps to stem a tide of cheap imports help push up domestic prices and as costs fall.
Shares in the Pittsburgh-based company jumped 9.6 percent at 9.58 a.m. in New York, the best performance in the Bloomberg World Iron/Steel Index. A second-quarter loss excluding one-time items of 31 cents a shares was narrower than the 50-cent loss estimated on average by 14 analysts tracked by Bloomberg.
Domestic steelmakers are benefiting after the U.S. handed down anti-dumping measures on imports from countries including China. Hot-rolled steel coil, a benchmark used in autos and appliances, has surged 65 percent this year after plunging 37 percent last year.
Besides the price boost, U.S. Steel is returning to profitability after Chief Executive Officer Mario Longhi’s efforts to streamline the company through an efficiency program labeled the Carnegie Way, after founder Andrew Carnegie. Now Longhi is forecasting profit of about 34 cents a share this year and adjusted earnings before interest, taxes, depreciation and amortization of about $850 million.
“It was the breakthrough quarter many investors have been waiting under the leadership of CEO ‘Super’ Mario Longhi in which Carnegie Way cost-cutting initiatives flow through to the bottom line,” BB&T Capital Markets analysts Garrett Nelson and Jason Nguyen wrote in note to clients.
Idled Furnaces
Longhi has idled iron mines and blast furnaces, put the company’s unprofitable Canadian subsidiary into bankruptcy reorganization and is permanently replacing high-cost steelmaking capacity in Alabama with a more efficient electric furnace to recycle scrap into new steel.
U.S. Steel advanced 7.7 percent on Tuesday after West Chester, Ohio-based AKS Steel Holding Corp. reported an unexpected quarterly profit.
The U.S. industry’s capacity utilization averaged about 74 percent in the second quarter, compared with 72 percent a year earlier, according to data from the American Iron & Steel Institute. Imports in April and May dropped 24 percent from a year earlier, according to the most recent data from the U.S. government.
Hot-rolled steel coil averaged $567 a ton in the second quarter, 24 percent more than a year earlier, according to data compiled by The Steel Index, a trade publication that surveys buyers and sellers. The metal touched an 18-month high in June.
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