United States Steel Corporation (NYSE:X) cut its pretax FY2015 earnings forecast by as much as $500 million. The excess inventories, the massive amount of imports and declining oil prices will hurt the profitability. The steelmakers in the United States are under pressure as prices have declined to lowest levels since the financial crisis of 2009. The hot-rolled coil index has dropped almost 26% to $444 per ton to date in this year. The Chief Executive Mario Longhi said that the market conditions are extremely difficult.
As per Global Trade Information Services, the total steel imports in the U.S. surged 14% to 7.9 million tons in the first two months of current year. The imports from China stand at 397,062 tons, up 24% from the same period, a year ago. Also, oil prices have declined over 40% in the past year and hovering around $60 per barrel.
Mr. Longhi, who took the role of CEO with United States Steel in 2013, has been focusing on costs cutting and laying off workers. In this year itself, the company has given layoff warnings to over 9,000 workers. It reduced operations at nine of its plants and opted for layoff of 2,800 workers.
In March, United States Steel stated it would close an Illinois plant for some time as it intends to consolidate its flat-rolled steel operations in the region, due to poor demand from the energy sector. Also, there is an additional plan to idle a segment of Minntac iron ore operations based in Minnesota.
Due to prevailing problems, United States Steel lowered its full-year guidance for adjusted earnings to $115 million to $315 million, compared to a previous guidance of $550 million to $850 million. For the first quarter, the loss came at 52 cents per share, compared with a profit of 34 cents a share. The net sales declined 26% to $3.27 billion.