| NEW YORK
NEW YORK Oct 27 U.S. Steel Corp (X.N) said it
sees early stages of a gradual U.S. and global recovery in
steel demand, but its fourth-quarter outlook remained cautious
as orders have fallen from third-quarter rates, due in part to
"We expect improvement in our overall fourth-quarter
results mainly as the result of increased demand for flat
rolled products in North America, driven primarily by
automotive markets and continued strength in tin mill markets,"
said Chairman and Chief Executive John Surma.
But he added that "We remain cautious in our outlook for
end user demand as customer order rates and our flat rolled and
order segments have decreased from the third quarter partly due
to seasonal slowdowns."
Executives spoke to analysts after U.S. Steel reported a
smaller third-quarter loss than forecast by Wall Street.
U.S. Steel said it expects a fourth-quarter operating loss
due primarily to continued low operating rates and idled
facility carrying costs for flat rolled and tubular segments.
"Despite these concerns and uncertainties, we believe that
the U.S. and global economies are in the early stages of a
gradual recovery, aided by global stimulus policies and may be
supported by continued improvement in credit markets and
inventory restocking," Surma said.
The executive said the company will continue to adjust
production to meet customers' demand. But it has in process
what it needs to fill its order book, which is stronger than a
month or two ago.
"As the order book slows, our shipments will have less on
the ground or in the process when we get to the end of the
year. We're just going through a mini cycle almost within the
fourth quarter," said Surma.
"Coming out of this quarter, you know, we're coming out at
a higher (utilization) rate than average. We'll probably move
down throughout the fourth quarter as we see seasonal
(slowdown) effects," the CEO said.
For flat rolled steel products, U.S. Steel expects fourth
quarter results to improve somewhat from the third quarter due
mainly to higher average realized prices and shipments.
It also said it expects to report an operating loss for the
fourth quarter primarily due to low operating rates and
continued carrying costs for idled facilities.
To adjust production to meet customer order rates during
the fourth quarter, it plans to idle the No. 14 blast furnace
at Gary, Indiana for needed repairs as well as one of two at
Asked about the shutdowns, Surma said it was in part to
repair the furnace, but also seasonally the right time with
order books starting to slow.
"If that should change, we can delay it," he said.
As a result, he said, "We currently expect fourth-quarter
capability utilization rates to be in line with the third
quarter level," but declined to give a specific rate.
Instead, he said, if the company idles the two blast
furnaces, it will be operating below the recent U.S. industry
average of 63.2 percent.
(Reporting by Carole Vaporean; Editing by David Gregorio)