United States Steel Corporation’s stock dropped almost 9% in after-hours trading Wednesday after US Steel lowered its outlook for the second half of the year, citing falling steel prices and a lack of demand.
US Steel 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. In its Wednesday release, US Steel reiterated 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 element 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 plants and lay off US workers in Michigan and Indiana.
By Clare Duffy, CNN Business