U. S. Steel falls 5% after profit warning
MARKET MOVERS
Shares of
U.S. Steel Corp., the biggest U. S. steelmaker, fell 5% yesterday after the company said third-quarter profit will be below analysts’ estimates because the cost of natural gas surged after Hurricane Katrina. The shares fell the most in almost three months.
Pittsburgh-based U.S. Steel, which declined to provide a specific forecast or range of estimates, was expected to earn US$1.44 a share in the quarter, the average 15 estimates in a Thomson Financial survey of analysts.
Natural-gas prices surged to a record in the U. S. Sept. 19, more than two weeks after the hurricane halted 34% of the fuel’s production in the Gulf of Mexico. Steel companies use natural gas to reheat metal that will be rolled into sheet, the most common steel product.
Shares of U.S. Steel (X/NYSE)
fell US$2.44, or 5.4%, to US$42.81, the biggest drop since June 23. Before yesterday, the shares were up 19% from a year earlier.
Higher energy prices have increased steelmaking costs by about US$20 to US$25 a ton, according to a report yesterday by Longbow Research analyst Christopher Olin. The price of sheet, the most common product used in cars and appliances, was US$435 a ton in August, down 39% from a year earlier, according to Purchasing Magazine.
U.S. Steel also said its domestic shipments will be “slightly below” levels reached in the second quarter.
Bloomberg News