The American steel industry is worried. US Steel, the 120-year-old icon of the sector, told investors that its financial outlook would suffer in the second half of the year because of falling prices and weak demand. It was the third steel company this week to issue a profit warning to investors.
US Steel’s stock fell 11% on Thursday. It’s the latest drop in a steady decline of the company’s share price — it is down more than 60% from a year ago — as President Donald Trump’s promises to revive the industry have failed to materialize.
Earlier Wednesday, Steel Dynamics (STLD), whose stock is down 34% in the last year, warned of declining profits from its steel operations. And Nucor (NUE), the nation’s largest steelmaker, lowered its profit estimates on Monday. Nucor (NUE)’s stock is down 18% over the past year.
US Steel (X) said Wednesday that it now projects a $0.35 loss per share for the three months ending in September, after taking a $53 million hit from a fire at one of its facilities and restructuring costs. The company also said negative market conditions and a lack of demand will result in the continued idling of two US blast furnaces, decreasing the company’s shipments in the quarter.
The company’s European operations are also hurting. On Wednesday US Steel reiterated its plans to reduce its headcount in Europe by 2,500 positions by the end of 2021, layoffs that were first announced in July. The European headquarters has already cut 1,800 positions to date.
Declines in steel prices and steady raw material costs hurt US Steel’s margins in Europe. And Trump’s tariffs on China, meant to help boost the US steel industry, may actually be hurting the company’s European operations. It cited a “continued high level of steel imports to Europe” as one factor contributing to its struggling performance, imports that may be coming from Chinese steel producers unable to sell in the United States because of the tariffs.
The company also expects pressures on its “Tubular Products” business segment, which focuses on the oil and gas industry, will hurt its 2019 earnings. Weaker demand and lower prices, as well as continued imports from non-American steel companies, forced the company to lower its full-year shipment projections for those products.
Reviving US manufacturing, especially the steel industry, has been a key promise of Trump’s presidency. But the boost from a 25% tariff on Chinese steel implemented in March 2018 didn’t last. In addition to the European layoffs, US Steel has been forced to close blast furnaces and lay off US workers in Michigan and Indiana.
– CNN Business’ Chris Isidore contributed to this report.