On the campaign trail, President Donald Trump pledged to revive the U.S. steel industry. At different times last year and this year, Trump has claimed that he had managed to do just that through the imposition of tariffs on steel imports.
The reality, however, is now beginning to look different with various U.S. steel companies, chief among them the United Sates Steel Corporation providing earnings guidance for the third quarter that paint a not-so-rosy picture.
Giant Steel Producer Bleeds Heavily Pre-Hours
The market has taken notice, and second-largest U.S.-based steel producer by shipments is Thursday’s biggest pre-market loser. Of course, we’re talking about U.S. Steel Corporation (X). This follows Q3 earnings guidance by U.S. Steel that shows it will suffer losses that are bigger than had been anticipated by Wall Street. Heading into Thursday’s open, United Sates Steel Corporation fell by over 12%.
Specifically, the United States Steel Corporation warned that it expects its diluted loss per share to be 35 cents in the third quarter. According to MarketWatch, this was worse than analysts had been expecting. Wall Street firms that had been surveyed by FactSet had been anticipating an adjusted loss per share of 10 cents.
Layoffs, Losses and Idling at United Sates Steel Corporation
U.S. Steel blamed the loss projection on falling steel prices in its home country and deteriorating market conditions in Europe.
As a result of falling demand, the steel producer will continue idling some of its blast furnaces in the U.S. and Europe for the rest of this year. The United Sates Steel Corporation will also continue cutting costs by laying off some workers.
Just four months ago, Trump had suggested that the investments U.S. Steel had made were an indication that the steel industry had been revived. Last month the giant steel producer announced layoffs at two blast furnaces.
Trump had also last year said that the domestic steel industry was the talk of the world.
The guidance offered by the United Sates Steel Corporation is not restricted to one steel firm though. The largest steel producer in the United States Nucor Corporation has indicated its third-quarter earnings will be lower than the actual earnings recorded during the second quarter.
Specifically, Nucor expects earnings of between 75 cents and 80 cents per diluted share in Q3. The projected earnings are nearly a decrease of roughly 40% relative to the actual earnings during the second quarter of this year and 65% compared to last year’s actual earnings in the third quarter. During the second quarter Nucor recorded earnings of $1.26 per diluted share while in the third quarter of 2018 it registered earnings of $2.13 per diluted share.
The third-largest producer, Steel Dynamics, has not issued rosier projections either. It expects earnings of between 66 and 70 cents per diluted share in the third quarter. This is a decrease of roughly 24% compared to this year’s actual second-quarter earnings. This is also a fall of 61% relative to last year’s actual third-quarter earnings. In Q2, the earnings of Steel Dynamics per diluted share amounted to 87 cents while in last year’s Q3, the earnings per diluted share were $1.69.