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September 19, 2019 10:30 AM, EDT

US Steel Stock Takes Hit, Earnings Estimates Missed

Steel Yard Daniel Acker/Bloomberg News

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U.S. Steel Corp. said it expects to report a wider loss than analysts were expecting, the third American steelmaker in three days to warn on their outlook. The shares fell.

The Pittsburgh-based company cited weakening markets for flat-rolled steel and tubular products for the energy industry. It expects an adjusted loss of 35 cents a share this quarter, according to a statement Sept. 18, compared with the average analyst estimate for a 6-cent loss.

The outlook comes after Nucor Corp., the largest U.S. producer of the metal, and Steel Dynamics Inc. this week gave guidance short of estimates. Steelmakers raised some prices earlier this quarter, but buyers have been slow to accept the increases, underscoring fading optimism more than a year after the introduction of U.S. tariffs meant to bolster the industry.

“This speaks to the emerging weakness in the energy sector in U.S.; it speaks to pervasive weakness in Europe as well,” Phil Gibbs, an analyst at Keybanc Capital Markets, said in a telephone interview. “They’re not getting help anywhere right now.”

The statement was released after the close of regular trading in New York. U.S. Steel shares fell 12% the morning of Sept. 19. The stock dropped by almost a third this year through the close of trading Sept. 18.

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On Sept. 16, Charlotte, N.C.,-based Nucor fell after saying its profit waned in the third quarter as prices decreased amid softening in several end markets. Performance in the steel mills segment is expected to decrease from the previous quarter “due primarily to lower prices for sheet and plate steel,” Nucor said.

Since the tariffs were announced in 2018, shares of U.S. steelmakers have slumped amid mounting concern that U.S.-China trade tensions threaten global economic growth and demand for the commodity. The S&P Supercomposite Steel Index of 13 producers has dropped 28% since the beginning of March last year.

U.S. Steel also said that it’s almost three-quarters of the way toward its goal of reducing its European workforce by 2,500 by the end of 2021. The company has eliminated 1,800 jobs in its European unit, according to the statement.

The company expects third-quarter 2019 adjusted EBITDA to be about $115 million, which excludes about $53 million of estimated impacts from a fire at a coke-making facility and restructuring charges.