The steel industry remains under tremendous pressure, as US Steel (NYSE:X), AK Steel (NYSE:AKS), ArcelorMittal (NYSE: MT) all reported poor results for their most recent quarter, with US Steel and AK Steel both posting losses.
Weak economies around the world are the major contributors to the terrible performance of the steel industry, as even countries with growth prospects like China are cutting back in areas to protect their economies from further erosion, especially the construction sector in China.
The consequence of China cutting back on domestic steel consumption is companies there will attempt to make up for it by exporting steel to other nations, which will continue to put downward pressure on prices, margins and earnings.
Every important metric for the industry is under pressure, as demand has fallen, sales dropped and costs risen. Many steel companies don't see this changing anytime soon.
As the global economy goes so will go the steel industry, and that doesn't bode well in an economic climate of caution and little or no growth.
US Steel lost $0.35 a share on revenue of $4.50 billion. Last year in the same quarter US Steel lost $0.17 a share. They haven't been profitable since the latter part of 2008.
ArcelorMittal's earnings dropped by 21 percent in the second quarter, but were still able to increase profits by 48 percent over the same time last year. Most of that is attributed to China demand for steel falling.
AK Steel also posted a loss for the quarter, losing $59.2 million, based mostly on the increase in iron ore prices.
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