U.S. Steel Corp. is hoping its first-quarter performance will improve on higher prices and better demand after a rocky year that ended in a fourth-quarter loss.
The Pittsburgh steel maker on Tuesday forecast improved business from automobile and heavy machinery equipment manufacturers, appliance makers and the energy industry. CEO John P. Surma said that he even thinks that the construction industry "may begin the long climb out of the recessionary doldrums." Construction was decimated by the financial crisis.
"We anticipate that the markets we serve will continue to improve in 2012," and that should lead to increased shipments, he told analysts during a conference call.Investors embraced the forecast and sent shares up $1.46, or 5.1 percent, to close at $30.19. Analysts cautioned that demand growth will likely be gradual as the global economy remains strained. Europe is suffering a crippling debt crisis and China's economic growth has slowed. Economists see healthy signals for the U.S. economy, but unemployment remains high at 8.5 percent. "I don't think the first quarter is going to be gangbusters higher than the fourth quarter, but I think it's more representative of steady improvement," Morningstar Inc. analysts Bridget Freas said. Other steel manufacturers, including Nucor Corp., have offered similar forecasts for the first three months of the year. The fourth quarter was challenging for the steel industry. Customers held back on making large purchases because of uncertainty about the economy. Steel prices fell and U.S. steel makers were hurt by heavier competition from European imports, Freas said. Most companies saw a turnaround in demand late in the quarter as the U.S. economic outlook improved. In the October-December quarter, U.S. Steel reported a net loss of $226 million, or $1.57 per share, compared with a loss of $249 million, or $1.74 per share, in the same quarter in 2010.
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