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U.S. Steel sees higher demand with recovery

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by Daily Commercial News

United States Steel Corp. believes business will improve in the second quarter, as the recovering global economy sparks more demand for steel.

PITTSBURGH

United States Steel Corp. believes business will improve in the second quarter, as the recovering global economy sparks more demand for steel.

The largest steelmaker in the U.S. forecast higher prices and stabilizing raw materials costs in the second quarter. The company said customer order rates have moderated recently, but it remained cautiously optimistic.

It’s similar to outlooks from Nucor Corp. and AK Steel Holding Corp., which also expect better second-quarter results. The industry has seen some market weakness, particularly in construction, and expects some impact from auto production cutbacks following Japan’s earthquake and tsunami in March.

“I think the one thing that all these companies are talking about are higher raw material and input costs, and those things seem to be front-page concerns,’’ Argus Research analyst Bill Selesky said.

U.S. Steel Corp. said its first-quarter loss narrowed sharply as it sold more steel at higher prices, although it paid more for raw materials such as coal and scrap steel.

It lost US$86 million, compared with a year-ago loss of $157 million.

Sales increased 25 per cent from the year-ago quarter to $4.86 billion.

“The biggest takeaway from the U.S. Steel report is that things are slowly improving on a demand basis,’’ Selesky said.

Chairman and CEO John Surma said he believes demand will be firm across most markets in the second quarter; including containers, appliances, pipes and construction.

He said some service and processing centres might cut back on buying steel because they are trying to moderate inventories. Those centres buy steel in large quantities and hold it in inventories until it is sold to customers.

He also said the company is looking at ways to shift its energy resources, at least in part, from coal and coking coal to natural gas as a way to reduce costs and lower carbon emissions.

Associated Press

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