US Steel is losing money again.
The steelmarker reported its first loss since early 2017, about a year before the Trump administration imposed 25% tariffs on steel imports in 2018. Those tariffs were designed to help reduce competition for the domestic steel industry and allow companies to add jobs and production.
The tariffs did give steel prices a brief spike and prompted some steel companies, including US Steel, to bring shuttered American mills back on line.
But the increased production, along with a drop in demand from steel customers, resulted in prices falling back. US Steel has shut some of its blast furnaces and laid off staff, citing the weaker market conditions.
And late Thursday it reported an operating loss of $35 million in the quarter.
“While market headwinds persist, we continue to focus on what we can control, including …reducing fixed costs,” said CEO David Burritt.
That reduction in fixed costs included setting a 2020 capital spending budget at $950 million, well below the $1.65 billion that had been expected by analysts.
“We view CapEx conservatism to be prudent given existing…realities,” said Philip Gibbs, a steel analyst with KeyBanc Capital Markets, in a note to clients.
The results were better than Wall Street anticipated, with sales greater than expected and a smaller-than-forecast loss.
Shares of US Steel (X), which are down 37% so far this year, were up 8% in early trading Friday in the wake of the report.
Other US steelmakers, incuding industry leader Nucor (NUE), AK Steel (AKS) and Steel Dynamics (STLD), have continued to post operating profits in the face of the downturn, but all are reporting sharply lower earnings than a year ago.
